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60 Simple Rules of Personal Finance - The Simple Dollar
Don’t ever let your “future self”...
Your future self might have more income, but it’s also fairly likely that your future self might have less income and you’ll find yourself in a really bad situation.
Even if your future self is doing well, there are probably going to be other big expenses that you’ll want to deal with at that time, like buying a house.
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Keep everything as simple as possible
Don’t ever let your “future self”...
Your future self might have more income, but it’s also fairly likely that your future self might have less income and you’ll find yourself in a really bad situation.
Even if your future self is doing well, there are probably going to be other big expenses that you’ll want to deal with at that time, like buying a house.
Focus on...
- Building an emergency fund: set up an automatic weekly or monthly transfer from your checking account to your savings, then leave the savings alone until an emergency appears.
- Eliminating high-interest debt: Set up a simple debt repayment plan by organizing your debts by interest rate, then attempt to make a double payment on whatever debt has the highest interest rate.
- Saving for retirement: It will actually end up being a much smaller burden than you expect, lifted up by the pleasure of knowing that you’re securing your retirement.
Build the right budget
You build a budget based on looking at your actual spending over the previous few months. Get real numbers, not estimates. Dig through your bank statements and credit card statements and figure it out. This will easily show you the areas where you actually overspend.
How much 1 hour of your time costs
- Figure out how much you earned last year after taxes.
- Subtract from that all of the costs of commuting, professional clothes, work-related meals, and other expenses you paid out of pocket.
- Figure out how many hours you worked, plus the hours you commuted and attended other business meetings.
- Divide your after-expenses income by your total hours of work to get your true hourly wage.
Renting vs. home ownership
It’s easy to get sold on the home ownership dream, but if it’s going to jack up your bills, it’s probably not a wise move.
The 10-second rule
Usually, just 10 seconds will convince you that you don’t really need the item, and if something still passes the test, feel free to buy it!
The 30-day rule
For more expensive items simply choose to wait 30 days after your first serious impulse before buying the expensive item, provided that it’s not an essential or emergency need.
Use that time to do a little research and make sure you actually want or will use the item, and also give it time to just sit there and see if the desire dies down. You’ll find that, more often than not, you won’t want the item after thirty days.
Unused subscriptions
Cancel your unused memberships and subscriptions.
Unused subscriptions and memberships do nothing but devour your money month after month.
Investing money in stocks
- Money in stocks, over the long term, tend to offer very good returns, but stocks tend to be very volatile, with lots of short-term jumps and falls in value. Hold on and be patient.
- Shoot for the average by buying index funds with low fees.
- Don’t bother with individual stocks: they require a ton of research and a lot of attention, and even then they come with a lot of risks.
- Have some portion of your investments in an index fund made up of international stocks and other international investments (euro and the Chinese yuan).
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Smart retirement planning boils down to a few simple truths.
- Time is on your side. The earlier you start saving money, the more time you give compounding to work for you.
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When budgeting comes in handy
- You have no idea where your money is going.
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- You struggle to afford the things you really want.
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Money rules to increase your net worth
- Don't spend all your income at once: the easiest way to grow your bank account is NOT to spend it all.
- Know how the Economy works.
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It takes more time to make money than to spend it
You work thousands of hours to make a certain amount of money. And then, you can drop it all on a new car, luxury vacation, watch, or anything else that you desire.The easiest way to grow your bank account is NOT to spend it all. It’s solid advice. The ancient Stoics knew about this too. True freedom means you desire less.
Know How The Economy Works
Why do economies generally collapse? What’s debt? Who prints money? Why do they print money?You don’t have to be an economist. The point is that basic knowledge about how all this stuff works prevents panic. “Oh shit! The market is down! What now!!” Panicking will not help you.
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Understanding personal finance
It is possible to make a budget work while still saving enough to retire. It starts with learning to change your habits so you can put money aside.
It is not that easy to make any sort of rea...
Knowledge is power
When it comes to money, people will do whatever they can to get hold of your money, regardless of how it will affect you.
Don't rush into any sort of decision making. Always consult a second source.
Automate anything you can
Assuming you have enough to cover the bills and aren't pulling an overdraft fee, start by automating your retirement savings. You know you need an emergency fund, so automate. Do the same with increasing your 401(k) contributions each year, or paying off your credit card debt.
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Save On Transport Without a Car
You’ll save far more if you don’t buy a car or sell it if you already own one but can go without it.
If you can use public transportation, you can save quite a bit of money on ...
Save On Transport While Keeping a Car
Carpool to work if you can to significantly reduce wear and tear on your car, save on gas, and take advantage of carpool lanes that might make it easier to get to work.
Check at least once a month to keep the tires on your vehicle properly inflated. Doing so can improve your gas mileage.
Save On Debts
Refinance your home or automobile at a lower rate to save money over the life of the loan and lower your monthly payment.
If your student loans are locked in at a high-interest rate, figure out whether it makes sense to consolidate all or some of them.
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Start Now
The sooner you start managing, saving, and investing your money, however limited, the better off you'll be as long as you avoid mistakes like investing everything into one stock. That’s t...
Oprah Winfrey
"You become what you believe. You are where you are today in your life based on everything you have believed."
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Christopher Paul Gardner
“… the secret to success: find something you love to do so much, you can't wait for the sun to rise to do it all over again."
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The Slow And The Fast Way To Build Wealth
- The long-term approach to wealth building: If you’re younger and your income limits allow, open up a Roth IRA. Invest in mutual funds and ETFs while making sure you have enoug...
9 Ways To Building Wealth Fast
- Save on vehicles. Before buying a car, investigate vehicle reliability, pricing and financing.
- Rent. Most rentals offer more flexibility in case you need to move. Also, not having the mortgage payment allows you to start saving earlier.
- Don’t be a consumerist, buy only the things you really need.
- Save a percentage of your income so you have more money to invest.
- Work hard on your current work regardless of your feelings for it. It’s easier than finding a new great opportunity and may lead you into a promotion.
- Educate yourself even if it doesn’t bring any immediate benefit, being educated opens new opportunities on the long run.
- Invest in yourself and your marketing to open up new opportunities.
- Being an entrepreneur is the best way to maximize your earnings, short of being an investor. Try it, even if it fails the learning from it will be invaluable in your next attempt.
- Real estate won’t make you rich overnight, but it’s a solid strategy to increasing your network.
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Side Hustle to Make More Money
You don't have to sacrifice all of your free time to start a side hustle, use the time you’re comfortable with and make a little bit of progress every day.
Take Action
Get to working on improving your finances today, not tomorrow. Reading the steps and thinking you’re capable of doing it but postponing it is just an excuse, an unprofitable one.
Communicate With Your Partner
Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.
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Be Creative To Afford What You Want
By following the conventional path of "school to loan to university to work" you risk running into serious debt. Being creative is a potential way to lessen or eliminate that.
Maybe finding a different and cheaper way of doing the same thing, doing a yard sale or getting a side job… Put your mind to it and you may find ways to get a financial boost.
The Problem With Mutual Funds
When you buy mutual funds, you are charged a purchase fee upfront. This is a one-time payment to the fund management institution. Annually, you will be charged with a percentage of management fees, commonly known as “expense ratio”, which can be expensive.
Beware when advisors at your bank recommend mutual funds to buy. They might be earning a sales commission.
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