There is definitely an abundance of financial advice available on the Internet today and it can sometimes become overwhelming, to say least. There are however a number of fundamental financial principles that shouldn’t be overlooked but oftentimes are. This blog is about those money tips and, if you adopt them, you’ll create excellent financial habits and be more prepared for any type of financial emergency as well as being better prepared for retirement. Enjoy.
Excellent Money Tip #1: There truly are no shortcuts. Let’s face it, the only way to truly double your money fast is to take it, fold it in half, and put it back in your wallet. The fact is that risk and reward are inherently correlated and doubling your money in a very short period of time means that you’re going to have to put that money at high risk. The higher the return, the higher the risk that you actually lose your money, which is not good in any way, shape or form. While all investments pose a certain risk, some are so high that you definitely want to avoid them.
Excellent Money Tip #2: Gadgets won’t make you happy, but they will drain your bank account. On any given day the average consumer is absolutely bombarded with advertisements for new and better gadgets, fun opportunities and expensive toys. The fact is, Madison Avenue knows how susceptible we humans are to “wanting the newest thing” and they know exactly how to get us to take action on these emotions. Simply put, if you’re constantly out spending money on the newest, the latest or the “best” new gadgets, toys, clothing, shoes, cars or what have you, you’re going to have an incredible collection of (mostly worthless) stuff when you’re done, and an incredibly empty bank account.
Excellent Money Tip #3: Save money intentionally. Seemingly in your 401(k), in and even in savings all good habits. Even better is stashing money that you would otherwise have spent on gadgets (see above) into those same accounts. For example, let’s say that you were going to buy a new smart phone but decided that the one you already had was good enough. In this case, give yourself a little pat on the back and take the money that you would have used and put it into one of those accounts instead. This serves to keep your money from evaporating into thin air (which it has a tendency to do) and also gives you the psychological boost of knowing that you “did good”.
Excellent Money Tip #4: Start saving even before your Debt is paid off. When you’re paying off credit card debt or student loans it may seem like a good idea to use all of your money to do that and not save any but, in actuality, it’s still important to get into the habit of saving. The fact is, as with any habit it takes a while to train yourself and form that habit deeply. Also, while paying down your debt is great, if your car breaks down or you have a sudden emergency, you’re going to need cash to pay for it. If you’ve been using all your cash to pay down your debt might have yourself what the experts call a “sticky financial situation”.
Excellent Money Tip #5: Live a little. Being frugal is an excellent idea, especially the case with the economy (among other things) in such a wretched state. The problem with being frugal all the time however is that it can lead some people to feel that they’re being “deprived” which can, in turn, lead to spending binges that can wipe out months of diligent saving work. Much like a “starvation diet”, if you’re on a starvation budget and you “cheat”, you usually cheat in a big way.
Excellent Money Tip #6: Put your finances on “autopilot”. Today it’s extremely easy to use your computer and the Internet to schedule paying your bills and, in most cases, if you do it correctly you won’t even have to think about most of your bills. The reason this is a great idea is that most of us are so busy these days that it’s relatively easy to forget a bill and, when we do, the extra fees and the “ding” that it makes on our credit report can be a high price to pay. Automating your savings in the same way by having heart of your paycheck deposited right into a 401(k) or another savings account is also an excellent idea.
Those are six of the best Money tips that the average consumer overlooks or even ignores. If you use them however you’ll find that, unlike many of your friends, neighbors and family members, you’re not only happier but you have quite a bit more money in your savings accounts, retirement accounts and emergency fund than they do. If you have questions relating to personal finance of any kind, please let us know and will get back to you with answers ASAP.