Sooner or later most of us will be caught saying or thinking “If I only knew then what I know now”. I started diving into specifics, but eventually settled on a list to get us thinking. Look for the series to continue with expanded topics upon each of the following 18 tips:
- Work smarter, not harder. Follow an interest or passion. Focus your efforts on working to develop a way of life, not just a job or position. There will always be a company willing to trade you dollars for your time – pursue your interests and work toward making that your way of life. Excellent read: “Rework” by Jason Fried & David Heinemeier Hansson.
- Surround yourself with good people. Good people are inspiring, trustworthy and ultimately great for business. Not everyone fits into this category, but don’t be afraid to reach out and build relationships with those around you.
- Develop the habit of saving. Much like brushing your teeth or wearing your seat belt, saving should be a habit. You should feel guilty when you don’t do it - it’s one of 10 easy things to increase your net worth in 10 years.
- Risk is not always good. When you’re young you hear “take risks, you have a lifetime to make it up”. Money compounds – taking excessive financial risks may cause you to miss out on years of compounded returns. Slow and steady can be a great financial strategy.
- Avoid debt, it will ruin you. Credit is good, credit debt is bad. Don’t succumb to societal influences calling for you to run up credit card debt with material possessions you don’t need or want. Control your credit, don’t let it control you.
- Don’t be afraid to switch careers. Life is short, if you find yourself on the wrong career path, get off of it. This is the U.S.A, going back to school, switching industries or starting a business is all within your reach.
- Do your own taxes. Fortune 500 companies dedicate upwards of 40% of their time analyzing tax ramifications. Individuals don’t need to spend that much time, however, being able to understand how your finances will impact your taxes will save you money in the long run.
- Avoid unnecessary school loans. Run the numbers, is it a good financial move to take on this much debt – will the career be able to payoff high school loans? Having to work a part-time job to avoid school debt has been proven to increase performance and decrease students from getting into or starting down a path of unfocused schooling. Think it through.
- Max out company matching of retirement. Start early contributing to a retirement account, especially when a company match or stock discount is involved.
- Don’t focus on money, people who do end up unhappy. Fortune and fame ultimately follow passionate people. Seek out what makes you happy and you’ll be forever satisfied.
- Less investments are better. Know what you’re invested in. Target 5 to 10 holdings that you can easily research and stay up to date with. Any amount over that is unnecessary and inefficient.
- Fees kill. A percentage here as a brokerage fee, a charge there for a commission will eat into your returns. Know the fees you’re paying and why you’re paying them. Avoid unnecessary fees at all costs!
- Have a rainy day fund. Life will throw you a curve ball every now and then. Having funds set aside to help you through a layoff or deductible payment will help decrease the discomfort of stressful times.
- Pay mortgage principal off early. Historically, one’s home has been their nest egg – a source of retirement equity and emergency funding. Paying just a $100 over your payment per month can lead to years of interest saved. Tip: Avoid pulling out equity or refinancing closing costs into principal.
- Become an expert. It’s good to know a little bit about a lot, but demand exists for those who know a lot about a little. Whether it’s a product segment, the law or a form of investment, there’s always more security and opportunity in an expertise. Taking a step toward expertise is one of the 8 ways financially successful people start their days.
- Spend less than you make. Spending more than you make is comparable to a ship who is taking on water – it can’t stay afloat forever, let alone when times get stormy. Get in the habit of saving up for purchases rather than paying them off your credit card
- Over insure yourself. Whether it’s car insurance liability coverage or an umbrella policy, spending a couple hundred dollars a year extra will give you the piece of mind that you’re protected.
- Create an estate plan. It’s never too early to finalize a will. Doing so will not only ensure you’re assets are devised properly, it will also save your family members from added costs and headaches when you’re gone.
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