With so much financial advice out there, it’s tough to know what you should listen to.
Some tips are so obscure or impractical they don’t apply to anyone.
On the other hand, certain nuggets of truth can transform the way you think about your money — you just have to find them.
16 crazy useful pieces of financial advice
Ready to separate the magic from the muck? Here are 16 useful pieces of financial advice from some of the world’s greatest money minds.
1. Visualize your goals
Before making any moves, you must answer one question: Why is improving your finances important to you?
Trent Hamm, the blogger behind The Simple Dollar, wants to own a house in the country. So he set a farmhouse photo as his computer’s wallpaper.
“Whenever I see it, I know what my big goal is,” he wrote. “Find a picture that signifies exactly what you want, then put it in places where you’ll be reminded of it time and time again. That little boost will push you, more often than not, just when you need it.”
Take some time to think about what you want your life to look like and why you want to start this financial journey in the first place. By visualizing your goals, you’ll be able to stay focused and motivated — even when it gets hard.
2. Start small and start today
In her 36-day “Live Richer Challenge,” Tiffany Aliche of The Budgetnista breaks down better finances into manageable chunks.
One of the steps she includes is “Do something TODAY.” It’s easy to ignore your finances, complaining it’s too much work to get started, but the first step is the hardest.
So instead of feeling overwhelmed, think about one thing you can do to improve your finances. Maybe it’s checking your credit score, consolidating your student loans, or canceling that unnecessary subscription.
“Smaller steps over a long period of time will have a greater effect on our lives than bigger steps in a shorter period of time,” wrote Aliche. “The reason is that most of us cannot commit to these big, abnormal acts for long, but we can do smaller, easier things consistently.”
3. Talk about money
Let me guess: Your mother probably told you it’s not polite to talk about money. Well, I’m here to tell you she’s wrong.
By insisting money should be a secretive topic, we’ve made it confusing and frustrating. Bringing it out in the open is the only way to change that.
So share your strategies, struggles, and questions with the people around you. Certified financial planner Sophia Bera thinks it’s particularly vital in romantic relationships.
“Make your relationship a judgment-free space to discuss money — your goals, past mistakes, and fears,” she wrote. “Set a few regular money dates to have uninterrupted conversations.”
4. Live within your means
This was the first piece of financial advice I learned — and I still think it’s one of the most important. But few people follow it.
As financial guru Dave Ramsey said, “We buy things we don’t need with money we don’t have to impress people we don’t like.”
Think about that quote for a second and try to shift your mindset. Before you buy anything, analyze why you’re doing so — and who you’re doing it for.
5. Choose your priorities
Before determining what’s worth spending money on, though, you’ll need to determine your priorities.
When you’re wondering what to buy or feeling down because your colleague has a nicer suit than you do, remember these wise words from blogger Paula Pant: “You can afford anything but not everything.”
To be successful in any aspect of life, including your finances, you need to make sacrifices. As much as you might wish you could, you can’t have it all. So think about your desires and needs. Would you rather have a nice car, for example, or go on a yearly vacation?
Like visualizing your goals, choosing your priorities will help you determine a direction for all your financial decisions.
6. Be frugal to gain freedom
FI/RE stands for “Financial Independence/Retire Early,” and it represents the ethos of an entire group.
One of its leaders is Peter Adeney, better known as the blogger behind Mr. Money Mustache. He and his wife saved 66 percent of their income throughout their 20s, allowing them to retire at age 30.
“If you can save 50 percent of your take-home pay starting at age 20, you’ll be wealthy enough to retire by age 37,” he wrote. “If you can save 75 percent, your working career is only seven years.”
Although his lifestyle, which includes biking everywhere and never eating out, isn’t for everyone, his message is. You don’t have to live a life of consumerism, and you don’t have to be like everyone else.
Adopt frugality and simplicity, and you could find freedom much sooner than age 65.
7. Don’t wait for permission
One way to save more? Earn more. If that thought intimidates you, you need to listen to millennial finance blogger Stefanie O’Connell.
“For so long, I felt that my earnings were dictated by factors outside of myself — my degree, my job title, my experience, my employer, etc.,” she wrote in an article for Business Insider. “I had been waiting for permission to overcome my perceived earnings limitations instead of realizing the value of my work and seeking out the people willing to pay that price.”
This financial advice applies whether you’re asking for a raise or finding new clients. Just remember: Most of the time, all that’s required is hard work — and getting out of your own way.
8. Focus on Big Wins
Getting a raise is what Ramit Sethi would call a “Big Win.”
Sethi is the author of I Will Teach You to Be Rich, and one of his key tenets is to focus on Big Wins — and not on skipping your daily latte.
He said making budgets and clipping coupons are “tiny, meaningless tactics.” Instead, he advocates for big steps toward financial health, such as moving to a cheaper apartment or negotiating your salary.
“The beautiful part about Big Wins is you do the work upfront — and they pay rewards for the rest of your life,” he wrote. “For example, one $5,000 salary negotiation in your 20s can be worth over $1 million over your lifetime. How many lattes is that worth?”
9. Make saving a habit
That being said, it’s essential to turn saving money into a regular habit.
“Set aside a definite amount for investment, even if it’s only as small as a dollar a week or even 50 cents a week,” wrote Napoleon Hill in Your Right to Be Rich. “It’s not the amount that’s important[;] it’s the habit of being resourceful and frugal.”
10. Pay yourself first
Once you’ve made saving a habit, it’s time to prioritize it — or “pay yourself first,” as George Clason, author of The Richest Man in Babylon, put it.
In the book, one of his characters offered the following advice to his friends: “Say to yourselves, ‘A part of all I earn is mine to keep.’ … Say it to yourself until the words stand out like letters of fire across the sky.”
Specifically, he said, before spending any other money, they should save 10 percent of their income.
It might sound simple, but it’s a powerful strategy. Rather than waiting until the end of the month and saving “what’s left” — because, let’s be real, there’s never anything left — set aside at least 10 percent as soon as you get paid. You’ll be amazed how quickly it adds up.
11. Automate everything
Jumping off that idea is David Bach, the author of nine best-selling personal finance books, including The Automatic Millionaire.
Last year, his No. 1 piece of advice was to “pay yourself first, one hour a day of your income — automatically!”
What did he mean by that? You should calculate how much you earn in an hour and then make sure that amount is automatically invested into a Roth IRA or 401(k) each day.
If you earn $40,000 per year, for example, that’s approximately $20 per hour, which means you should automatically funnel $20 per day, or $140 per week, into a retirement account.
Doing that, Bach said, will “change your life forever.”
12. Take advantage of compound interest
The reason Bach is hellbent on investment accounts (along with every other finance expert) is a little thing called compound interest. This phenomenon occurs when the money you’ve invested earns interest — and then that interest earns interest.
There’s even a rumor that Albert Einstein once declared compound interest “the most powerful force in the universe.” (That would be a pretty big deal for a dude who discovered the theory of relativity.) Although he probably didn’t say that, the sentiment is what matters.
Thanks to compound interest, the money you invest can grow exponentially. All you have to do is start early and wait.
Remember that $140 per week from the example above? If you invested it in the stock market for the next 35 years and earned a 7 percent return, you’d end up with more than a million dollars by the time you retired.
13. Invest in low-cost index funds
To get those kinds of returns, though, you can’t use a savings account. With interest rates of less than 1.00%, they’re never going to get you anywhere.
Instead, you need to focus on the stock market. And I don’t mean buying and selling individual stocks. Unless you know what you’re doing, that’s a surefire way to get frustrated — and lose lots of money.
Instead, follow the advice of billionaire investor Warren Buffett, who advises people to invest in low-cost index funds.
“Consistently buy an S&P 500 low-cost index fund,” he told CNBC. “I think it’s the thing that makes the most sense practically all of the time.”
14. Protect what you’ve earned
Even if you never reach Buffett’s level, it’s vital to protect what you’ve earned. That’s one of the central tenets of financial expert Jean Chatzky’s philosophy.
“You need to protect the financial world you’ve built for yourself,” she wrote. “With both insurance and a basic estate plan, you can ensure that no disaster — large or small — can take it all away from you and the people who depend on you.”
If you have people who rely on your salary, that means purchasing a life insurance plan. It also means writing a will that outlines your last wishes. It might seem morbid, but it’s better than leaving your family without access to everything you worked so hard to earn.
15. Never stop asking questions
After reading all the financial advice above, you might think you know everything you need to know about money. But that couldn’t be further from the truth.
Farnoosh Torabi is the author of several books, including When She Makes More. She once wrote that two of the most important lessons she’s learned are “Nobody cares about your money more than you” and “Ask questions. Even the dumb ones.”
Those two insights go hand in hand. Since no one cares about your money as much as you do, it’s essential that you advocate for yourself by asking questions and continuing to learn.
Follow personal finance bloggers, read money books, and listen to podcasts — absorb information in the medium that serves you best.
16. Remember what’s important
Financial guru Suze Orman is famous for saying, “People first, then money, then things.”
I want to end with this piece of advice because it’s easy to get wrapped up in the money and lose track of what matters: your relationships.
Yes, money is a vital tool in accomplishing your goals and living a rich life — but it certainly isn’t the most important thing.
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