Getting a handle of managing your basic personal finance can
return many financial rewards as well as provide you with more free time to
pursue your interests and freed up money to invest. When we talk about the
basic elements of anyone’s personal finances we are including a personal
budget, savings and investment planning, managing your income and outgoings
resourcefully as well as applying for loans and finance and various insurance
policies you may need over your lifespan.
Here are key tips to follow for your personal financial success.
· Take charge of your finances. Procrastinating
is detrimental to your long-term financial health. Don’t wait for a crisis or
major life event to get your act together. Read this book and start
implementing a plan now!
· Don’t buy consumer items (cars, clothing, vacations, and so on)
that lose value over time on credit. Use
debt only to make investments in things that gain value, such as real estate, a
business, or an education.
· Use credit cards only for convenience, not for carrying debt. If you have a tendency to run up credit-card debt, then
get rid of your cards and use only cash, checks, and debit cards.
· Live within your means and don’t try to keep up with your
co-workers, neighbors, and peers. Many
who engage in conspicuous consumption are borrowing against their future; some
end up bankrupt.
· Save and invest at least 5 to 10 percent of your income. Preferably, invest through a retirement savings account to
reduce your taxes and ensure your future financial independence.
· Understand and use your employee benefits. If you’re self-employed, find the best investment and
insurance options available to you and use them.
· Research before you buy. Never
purchase a financial product or service on the basis of an advertisement or
salesperson’s solicitation.
· Avoid financial products that carry high commissions and
expenses. Companies that sell their products
through aggressive sales techniques generally have the worst financial products
and the highest commissions.
· Don’t purchase any financial product that you don’t understand. Ask questions and compare what you’re being offered to the
best sources, which I recommend in this book.
· Invest the majority of your long-term money in ownership
vehicles that have appreciation potential, such as stocks, real estate, and
your own business. When you invest in
bonds or bank accounts, you’re simply lending your money to others, and the
return you earn probably won’t keep you ahead of inflation and taxes.
· Avoid making emotionally based financial decisions. For example, investors who panic and sell their stock
holdings after a major market correction miss a buying opportunity. Be
especially careful in making important financial decisions after a major life
change, such as a divorce, job loss, or death in your family.
· Make investing decisions based upon your needs and the long-term
fundamentals of what you’re buying. Ignore
the predictive advice offered by financial prognosticators — nobody has a working
crystal ball. Don’t make knee-jerk decisions based on news headlines.
· Own your home. In
the long run, owning is more cost-effective than renting, unless you have a
terrific rent-control deal. But don’t buy until you can stay put for a number
of years.
· If you’re married, make time to discuss joint goals, issues, and
concerns. Be accepting of your partner’s money
personality; learn to compromise and manage as a team.
· Prepare for life changes. The
better you are at living within your means and anticipating life changes, the
better off you will be financially and emotionally.
· Read publications that have high quality standards and that
aren’t afraid to take a stand and recommend what’s in your best
interests. Avoid those that base
their content on the hottest financial headlines or the whims of advertisers.
· Prioritize your financial goals and start working toward them. Be patient. Focus on your accomplishments and learn from
your mistakes.
· Hire yourself first. You
are the best financial person that you can hire. If you need help making a
major decision, hire conflict-free advisors who charge a fee for their time.
Work in partnership with advisors — don’t abdicate control.
· Invest in yourself and others. Invest
in your education, your health, and your relationships with family and friends.
Having a lot of money isn’t worth much if you don’t have your health and people
with whom to share your life. Give your time and money to causes that better
our society and world.
