Finance guide everyone should know please read and share!
“Do not be carried away by the pack. To be a successful investor, you must divorce yourself from the fears and ambitions of those around you, however difficult it may seem to you. “Warren Buffet
Your home … Is it better to buy or rent it? New or used vehicle? Invest in pesos or dollars? When should you educate yourself in finance? At school, college, work or never? How many credit cards to have? Which one is the best?
It depends. It depends. And it depends! In personal finance the truth is that there are no absolute truths. What works for you, with all the logic and meaning of the world, for me can be the true destruction of my wealth.
Now, the question arises: Is there any absolute truth? Is there any truth that is as valid now as it was 100 years ago or as it will be in the years 2116? Apply here, in Washington, in Kathmandu or in San Pedro de Atacama?
Natasha Burton recently proposed five basic or “classic” financial advice, which holds her to be effective, rain, thunder. I assume them as their own, adding two more. Which are?
You have a commitment to yourself. Pay yourself first!
It is one of the most repetitive concepts in the classic “The richest man of Babylon”. It is also one of the most forgotten, even when we find money to pay banks, suppliers and other third parties.
The idea is simple: get a part of all income for you as soon as you get it. In other words, just as you budget for the rent or the phone, assign yourself an amount for your goals.
Which? At least there are three that I hope will give you importance in your finances:
- your emergency fund
- your plan to reduce debts
- and for your retirement.
How to start? It is easier than you think. A first step will suffice. For example, saving even 1% of your salary. When you see that it is possible, months later, it doubles the amount saved. Even if it takes five years, if you maintain that discipline, you will achieve significant savings.
Live below your possibilities
Leave a margin between your expenses and your possibilities. That you can buy the penthouse does not mean you have to buy it. Neither the new vehicle than the used one. And much less the latest model of the smartphone when the one you have continues to work perfectly.
In other words, that you can spend more of your own money (or the bank, by way of loans) does not mean that you should do it. Of really rich and intelligent people is prudent spending.
How to achieve it? Make sure you always, always, always spend less than you enter. The real rule of thumb.
Get ready for the worst
Murphy exists. If something can go wrong, it will go wrong. Do not be an ostrich, believing that everything in your life will be perfect. I’ll bring you something: it will not be. That’s life! Get over.
So, what can you do? Two ideas: Save for contingencies, and consider some level of insurance coverage, be it life, health or your property.
The best insurance is one that you can build and subscribe yourself. Builds an emergency fund, with enough savings to cover one or more months of household expenses.
I am convinced that, before your first home, your first car or your first foray into the stock market, your best investment is to build that liquidity “nest” into a savings account or investment fund.
When Murphy knocks on your door, with some unforeseen, health emergency or loss of income, you’ll remember me!
Put your money to work
This financial advice can be found in the Bible (see Matthew 25). Saving is fine, but if you can put your savings to play, do it!
It’s little use to leave RD $ 100 in a savings account, which will pay RD $ 1 a year, when the same money, in the same financial entity, can generate RD $ 7 invested in fixed term. I think it is almost an obligation to get the most out of the capital you can accumulate.
Eye: The only exception to this rule is your emergency “brunt”. For these funds, rather than return, the key is their liquidity and availability.
Invest in you
“Invest in yourself as much as you can,” advises financial advisor, Warren Buffet. I totally agree. While we can think of the control of spending, the discipline of saving and elimination of debt, just as important is to increase your ability to generate income.
Do not go to the extreme of accumulating postgraduate and multiple masters unnecessarily. Capable that more expensive can be the salt your intellectual ego.
Think of basic skills, valuable for the economic field in which you are interested in developing yourself. It can be languages, technological tools, academic disciplines or formative experiences.
If investment is required to achieve this development, consider other alternatives, many free or semi-free available in the market.
When you are going to interview, or consider for a promotion, your performance in practice will be worth more than an additional line in your resume.
Avoid toxic debts
If I could kneel and humble myself in front of you to beg you something, it would never, never, never! You can finance with 60% credit cards or, much worse, 240% with usurers and lenders.
I do not know a legitimate investment that generates those returns in a sustainable and healthy way. Better limit yourself, pro-gram and save to achieve your goals, than to try, in an accelerated and irresponsible way, to make them reality based on debts.
Define and visualize your goals
Healthy personal finances are 80% individual and only 20% finance. Your attitudes towards money are better than knowing what to invest in or how to finance.
That is why I invite you to think about what is truly important to you. Identify those goals, although it may take a long time to achieve them.
If you identify them with first and last name (literally!), You will see how, little by little, one by one, you will realize them. Amen.