Everyone needs financial advice at some point. Follow these financial tips to get started in the right direction.
1.Max your 401k or other employee contribution OR at least enough to get your employer’s maximum match. Don’t throw away free money. This can be thousands of dollars you are leaving on the table.
a. Know where your money is invested in your 401k (common stocks, bonds, international stocks, etc.). Choosing the wrong investments can lose you 1000s of dollars. Also if you are not checking your ira with https://www.sofi.com/roth-ira-calculator/, you might not get as much money as you have been getting.
2. Get inexpensive, well-diversified mutual funds such as those in Vanguard (VTSAX). If you can’t invest a lot, start here.
This app (get $5 just for signing up) allows you to invest small amounts to grow wealth over time. It even has a cool recurring investment feature where you can invest an X amount from your account every day/week/month. Set it and forget it. Fees are low as well.
See below how I used this app to invest a good amount with a good return in a few short years:
Sign up here and start investing today —-> I Want to Invest My Spare Change Now!
3. Save 20% of what you make. A large income does not equal wealth. Wealth is what you save, not what you spend or buy. The next financial tip is very important.
4. If you have credit cards, always pay in full every month. I only have debit cards.
5. Buy used cars in ca$h. The certified used cars these days are solid and cost a lot less. You save paying less for a used car AND no interest charges for a car loan.
6. Max out tax-advantaged vehicles like Roth, SEP and 529s.
7. Make sure you know your fees. High fees can eat away at your investment earnings. Avoid actively managed funds.
8. Only choose a fiduciary as a financial advisor.
9. Read some basic financial books:
a. “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy.”
-develops the right mindset to achieve wealth
The success stories speak for themselves in this book from money maestro Dave Ramsey. Instead of promising the normal dose of quick fixes, Ramsey offers a bold, no-nonsense approach to money matters…
Use it for yourself or give it as a gift (makes a great wedding gift).
-great for high earning professionals especially physicians
d. “The Bogleheads’ Guide to Investing”
-a slightly irreverent, straightforward guide to investing for everyone. The book offers sound, practical advice, no matter what your age or net worth.
e. “Retire Inspired: It’s Not an Age, It’s a Financial Number”
-In Retire Inspired, Chris Hogan teaches that retirement isn’t an age; it’s a financial number an amount you need to live the life in retirement that you’ve always dreamed of. With clear investing concepts and strategies, Chris will educate and empower you to make your own investing decisions, set reasonable expectations for your spouse and family, and build a dream team of experts to get you there.
10. Read these other sources and stay educated and gain valuable financial tips. (Money Magazine, Business Insider, Kiplingers, Money Mustache, Bogleheads, The Penny Hoarder). These give investing, business and saving advice.
11. Learn what opportunity cost is and think about this in everything you purchase. It’s defined as “the loss of potential gain from other alternatives when one alternative is chosen”. For example, if you choose to buy a Michael Kors purse for $700, that is $700 that is gone forever. It cannot be invested or saved.
12. Do a monthly budget. Set average projected expenses and try to stay in those boundaries. Try to make saving and investing more joyful than spending. EveryDollar is a great tool.
13. Acquire some passive income streams. Make your money work for you by working smarter, not harder. The average millionaire has 5+ income streams.
14. Try to understand taxes as much as possible. Do taxes yourself for as long as possible (or find a good CPA). People who don’t understand the tax system never become wealthy because they don’t realize that a major way to lose money is through taxes.
15. Understand the power of compound interest. Wealth is like a snowball that starts small for a while but sooner or later will hit an inflection point leading to big gains. Knowing this early can be better than any financial tip anyone can give you!
When you get depressed that your friends in the neighborhood appear “wealthy” because they are driving luxury cars and living in 5000 sq. foot houses, remember this calculator and never forget it. For example, if you chose to save $30,000 buying a reasonable car such as a Honda as opposed to a luxury car and invested that money, with a 7% interest rate and growing over 20 years, you would have $116,090.53. Click on image to use the calculator and play with some numbers.
16. Keep ALL of your receipts and know the deadlines of when you can return purchases. I used to lose a lot of money being unorganized. Some stores will only give you store credit or significantly much lower than what you paid without a receipt.
17. Don’t donate to everyone and your mother. I see people donating to every cause possible when they can barely afford to pay their own bills. Donate when you can and as much as you think you can. Nowadays, almost every major retailer tries to get a donation form you as you checkout. I just say “no thanks”. This could be thousands of dollars that you could save and invest. I am not saying to not be generous, but be generous when you can afford it and give to a cause you believe in.
18. Sign up for rewards programs and/or store debit cards with stores you visit frequently. You can get discounts, coupons and other special perks. My favorite is the Target RED card. You can get the credit or debit card. I have the debit card which saves me 5% on everything I purchase and it comes right out of my checking account. It’s secure and you even get discounts on sale items. Apply for yours here.
Benefits:
- 5% off everything in store and online. This can add up quickly if you shop at Target a lot.
- Free shipping on all online orders.
- Custom offers for what you usually shop for. Coupons for stuff you buy.
- Special promotions only for RED card holders like early Black Friday deals.
19. Avoid late fees on your bills. The easy solution is to setup auto-pay from your bank account. This will save you time and money.
20. Move. If you live in a high cost of living area, a lot of your money is going to housing, utilities and food. That can be $1000s of dollars that could be invested. Be smart about where you live.
Hope you found these financial tips useful. Now, put them into action and create a great life for yourself!
Final thoughts from a video by MJ Harris:
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