Even though the many personal finance advice out can get pretty overwhelming, there are some fundamental principles that one shouldn’t overlook. Here are some of them:
By Erin Baehr
1. There are no shortcuts.
If someone tells you they can double your money in no time with no risk, tell them you already know how. Then fold your money in half and put it back in your pocket. Risk and reward are correlated. Doubling your money in a short period of time equates to a high return on your investment; that corresponds to taking more risk, not zero risk. There’s nothing wrong with taking appropriate risk, but buying into an investment with those kinds of unrealistic promises is sure to disappoint.
2. Watch your waste.
Shiny objects aren’t the only source of needless spending. It’s painful to look at our lives sometimes and realise what we have wasted away. Impulse buying, including buying doubles of things because we can’t remember where we put them in the first time.
3. Save money, and do it intentionally.
Saving regularly toward an emergency fund are fundamentals of good financial health. But one should also stash money that one would have spent but decided not to. Pat yourself on the back for your frugality, and then take that chunk of change and put it in the bank instead.
4. Don’t wait until that debt is paid off to save.
It may seem more prudent to skip the savings when one is paying off debts, but it’s important to continue to save anyway. It takes time to form a habit, and training yourself to save is a great habit to form. So start now. Aside from that, what will you do when your car breaks down and there is nothing in the bank to pay for the repair?
By Erin Baehr
1. There are no shortcuts.
If someone tells you they can double your money in no time with no risk, tell them you already know how. Then fold your money in half and put it back in your pocket. Risk and reward are correlated. Doubling your money in a short period of time equates to a high return on your investment; that corresponds to taking more risk, not zero risk. There’s nothing wrong with taking appropriate risk, but buying into an investment with those kinds of unrealistic promises is sure to disappoint.
2. Watch your waste.
Shiny objects aren’t the only source of needless spending. It’s painful to look at our lives sometimes and realise what we have wasted away. Impulse buying, including buying doubles of things because we can’t remember where we put them in the first time.
3. Save money, and do it intentionally.
Saving regularly toward an emergency fund are fundamentals of good financial health. But one should also stash money that one would have spent but decided not to. Pat yourself on the back for your frugality, and then take that chunk of change and put it in the bank instead.
4. Don’t wait until that debt is paid off to save.
It may seem more prudent to skip the savings when one is paying off debts, but it’s important to continue to save anyway. It takes time to form a habit, and training yourself to save is a great habit to form. So start now. Aside from that, what will you do when your car breaks down and there is nothing in the bank to pay for the repair?
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