The Ten Minute Guide To Personal Finance

Winning with money is not hard.  You don’t need to be good at math or a finance wizard to win with your money.   You don’t need to make $100,000 a year, and you certainly don’t need an advanced degree.  What is difficult is applying the behaviors needed to win with personal finance everyday for years on end.  It’s much like losing weight.  The solution is easy in principal; intake fewer calories and burn more calories to get in shape.  The same basis is true of personal finance; spend less and earn more.  both are of course a bit easier said than done.

My Ten Minute Guide To Personal Finance:

1. Think long term.  Think about 5 years, 10 years, 30 years down the road.  Most people only think about this week and this month.  Engaging in long term thinking gives you a huge edge in life.  Use this long term thinking to set goals and priorities, then ask yourself before every decision you make whether or not this activity will help or hinder those goals.

2. Earn some money and build a career. As your income increases save that money instead of increasing your lifestyle.

3. Cut expenses with utility valued over appearances: Focus on the big categories; housing, vehicles, and taxes.  Spending 10% of your income on housing instead of 33% gives you a major advantage.  A $1,000 car has 95% of the utility of a $30,000 car.  I just listened to call in to the Dave Ramsey show from a woman who earned $190,000 a year and lived in a $40,000 home.  Winning. Most of her peers probably live in $500,000 McMansions.

4.  Save some money. Start small and challenge yourself to constantly increase your savings rate.

5. Invest some money.  Investing once again is not hard.  You don’t need to analyze stocks or do anything fancy. The easiest way to get started investing is with an IRA from Betterment, or through your 401K through work if it is offered.  Target retirement date funds are an excellent option when getting started with investing.  Make sure if you have a 401K through work that you contribute as much as needed to maximize your employer match.

6. Buy A House, with a 10, 15, or 20 year mortgage that you can pay with 1 weeks net paycheck (or less!).

7. Track your progress. Use a spreadsheet or Personal Capital.  keeping track of how your net worth improves year over year, over year.  To me this is the most motivating sheet I have.  I also keep track of yearly earnings and savings rates.

8. Invest in yourself: Invest time and money in your education in a focused (and thrifty) manner.

9. Work hard and be nice to people. This is probably the absolute best advice I can give to anybody.  If you want to move forward in life, in your job, in your community, work hard and be nice to people.

10.  Read. Dedicate yourself to being a lifelong learner.  Read about management, personal finance, presentation skills, read about anything that you are interested in.

I honestly think that following these 10 bullet points will lead anyone to become wealthy.  What are your thoughts on this ten minute guide to personal finance?

 

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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