Today we can get financial advice from various sources but it is up to us to look for it. We should aim at becoming better when managing our money.
Unfortunately, personal finance was never part of my school curriculum. Since young, I did learn the basics about saving but not so much about investing and the wonders of compounding.
Proper financial advice can change our lives. Over the years, I have heard thousands of financial advice without understanding the real impact. Today, more mature about my financial life, I do see the point of some of them.
Below are the 4 pieces of advice that I considered wise and the ones I took with me.
Pay Yourself First
Paying yourself before paying something else works great. With today’s tool, you can easily setup an outstanding order as soon as your paycheck is received.
The amount is not important. What is valuable is the action we are taking to improve our financial life. Little money can turn into big money in just a few years when invested.
Moving out the money from the current account also helps to mentally block momentum purchases. The fact that we need to check first if the balance is enough, will force us to think twice before spending.
As our money disciplines grows, we can start increasing our monthly savings. This has definitely worked for me. Today I am able to save much more than 40% of my income.
Pay Off High Interest Debt
Not all debt is bad, but high interest debt kills us silently. High interest debt can grow as a snowball and it might become a huge problem if not handled correctly.
Banks are there to make moeny with everyting they offer. Credit cards are not an exception and today we can even get them for free…
If it is free, they are expecting to make money with you when you use it. That is the trap. Usually credit card intereset rates can be up to 20%.
When you cannot earn 20% interest with your money, our best tool is to pay this type of debt as fast as we can.
Live Below Your Means
So many people today think their income should dictate how you live, how you dress, where you travel, what car you drive…
Remember that what today is your income, tomorrow might not exist. So many things can happen that are out of our control but it seems most us can easily forget them.
Separating desires from needs is an important work we can do for ourselves. Setup targets for spending in these both categories but leave room for uncertainity.
What if you are fired? Are you able to survive for a few months without a paycheck? Imagine this and how you would adapt to the situation. Most of us are likely to cut on our wishes if the situation requires.
Taking the same approach when we do not need to it can then become a safety net.
The logic is simple. If everyone does the same, everyone will get the same results.
Wealthy people do not spend their weekends watching TV or procrastinating. If they do it now, is because at some point of their lives they worked harder than most of us.
Time is the most valuable resource we have and it is the same for everyone on planet Earth. Elon Musk has the same 24 hours a day as you and me.
Taking the risk to learn something new, develop a new business or a simple side hustle are all ways to take risks and bet on ourselves.
Whatever we decide to do, taking it seriously and committing to it is essential for success.
As a final note, all look for financial advice that makes sense for you and your values. Do you consider these advices relevant? Let me know in the comments below.