My oldest child went off to college yesterday. Before he said goodbye he asked me if I had any advice for him as he started the independent part of his life.

I thought for a moment and told him I would give him an answer later. I knew there wasn't just one thing I wanted to tell him; there would be hundreds -- maybe thousands of things I would remember randomly that I wanted him to know. So I decided to make a segment on my blog here of Life Pro Tips. They're for Nate, but maybe other people will enjoy them too.

Pay in Cash

It will be tempting to use credit to make purchases; especially purchases of things outside your day-to-day expenses. Resist this. Instead make it your habit to only buy things that you can purchase with cash on hand.

This is a good policy for several reasons:

  1. You won't become a slave to your debt. If you buy something with credit, it owns YOU, not the other way around.
  2. Taking a bit of time to save for a purchase gives you the opportunity to research the best options and make a solid choice.
  3. Having a cash-only policy will reduce the amount of your impulse spending.

Some things aren't easy to buy in cash. I'd make a general exception for purchasing a home.

But How Do I Build Credit?

If you're paying for everything in cash, you might be wondering how you're going to build a good credit history. Open a credit card account with your bank (this part is important) and use it for a subset of your regular monthly purchases. Set it to auto pay from your checking account. Now you can think of those purchases as cash purchases while you build a history of on-time credit payments. Pick just one or two things like your cell phone bill or groceries.