Back to Basics

At the end of the day, financial advice is pretty simple. We just struggle to follow it. So I’d like to remind you of some old school money mantras that I came across in a recent LearnVest article that have withstood the test of time:

  1. Pay Yourself First – Be purposeful with your money and invest in your future. Make sure you set aside money for yourself whether you make retirement account contributions, pay down debt or build up that emergency fund. You should be the most important expense in your budget.
  1. Live Below Your Means –At the end of the day it comes down to basic math. You have to spend less than you make. Make sure you are able to pay off your credit card every month. If your balance sheet is in the red, take the time to figure out where you can cut corners. And if you get a raise, refrain from upgrading your lifestyle dollar for dollar.
  1. Save for the Unexpected –Life is unpredictable. You never know what medical or house expense is around the corner or even potential job layoff. It’s hard to watch that money sit idly in a savings account, but ultimately you should have 3-6 months of living expenses stashed away in an emergency fund. You will be grateful it’s there when luck isn’t on your side.
  1. Let Your Money Work for You –For longer term goals, you likely need your money to experience more growth than it would in a low-interest savings account. Invest your money in a low-cost globally diversified portfolio based on your risk tolerance so you can take advantage of the power of compound interest. Each dollar you earn is one less dollar you have to save.
  1. Your Best Investment Is in Yourself –You are your greatest asset so take the time to invest in yourself. Refine your talents and build your skillset so you can increase your earning power. It will only increase the human capital that you can convert to financial capital over time.

The above basic principles provide a foundation for a strong financial future so take the time to revisit and master the basics.