Most people know to develop a budget, save, and avoid running up debt. These are the fundamentals of good personal finance. Every finance guru preaches these three concepts.
Track Net Worth
Your net worth is your assets minus your liabilities. Your assets encompass everything you own. This could be equity in your residence, stocks, commercial real estate, etc. Your liabilities are everything you owe, like credit card debt, car payments, mortgages, etc.You’re doing fine if your assets are worth more than your liabilities. If not, then you need to make an effort to pay off debt to bring it into balance.
Cash Is King
The mantra is to invest for retirement. But your financial house needs a strong foundation, which only comes when you have an emergency fund.An emergency fund isn’t as glamorous sounding as investing in stocks, but it will save you if there’s a job loss or expensive car repair.
If you don’t have an emergency fund, you'll be dipping into your investments, thereby losing more money in the long run.
Level Up Network
Look around at the people you hang out with. Are they always going out to dinner and spending what they have? Do they complain that they’re always in debt?Investing Should Be Boring
Good investing is like watching paint dry. It shouldn’t be fast-paced and exhilarating. If you want that, Las Vegas might be the place for you.Go with logic, not emotion, when investing. You'll want to buy low, but consider sitting on it for years. You don’t want to reevaluate it daily. The goal is steady growth.
Invest for the Long Run
Famed investor Warren Buffet said it best: “Our favorite holding period is forever.” In other words, don’t focus on the short term, look to the long term.And Buffet practices what he preaches. His Berkshire Hathaway has held stocks in some corporations for decades. For example, shares in Coca-Cola have been held for 34 years, and have held shares in Costco for 22 years.
Marry With Money in Mind
Marrying with money in mind doesn’t mean marry for money. It means being on the same page with your spouse regarding finances. A household shouldn’t be divided because of finances. There should be mutual goals.Don’t Buy to Impress
Keeping up with the Joneses only keeps you in the poor house. Do you really need that luxury car, or is it just to impress your neighbor?Spend Only When It’s Important
This might seem like an odd finance tip. After all, telling you to spend sounds counterintuitive. But spending on what you love rather than what you like can save you money in the long run.If you love buying old books but don’t care about clothes, then buy your jeans at Walmart and save for what you truly love.
Unsubscribe From Promotional Emails
Have you ever received a promotion in your email and thought, that looks like a good deal? It wasn’t something you were thinking about purchasing, but it’s tempting and right in front of you.Remove Online Auto-Saved Credit Cards
Never save your credit card information online. Even if it’s your favorite online retailer, you don’t want to save it.This will protect you to a certain degree from mindless spending. If the card is there and you don’t have to go fishing for it, you’re more apt to push that “buy” button.
Track Spending for a Month
Track your spending the old-fashioned way. Take a pen and notebook and write down everything you spend money on during a month. Even if it’s a cup of coffee, write it down.Everyone talks about the evil of credit cards, but a debit card can be just as dangerous. Knowing where your money is going will help you save.
