Step on the financial scale regularly - This may be the most difficult rule for most people. Just being open to the reality of your situation scares many people to the point of avoidance. But just like stepping on an actual scale can be painful sometimes it's essential to be in touch with reality. What does this look like practically? It can be as simple as regularly calculating your assets - adding up what you have then subtract your debts. This equals your net worth. This is an important number, write it down, I'd suggest recording your net worth monthly. It might be painful at first, but stick with it, watching that number slowly increase can be a huge motivation
Get organized - After you're aware of where you stand financially, you'll want to get a handle on your bills and make sure to pay them on time. According to a recent survey of 1000 people by creditcards.com a whopping 42% admitted to being late on at least one credit card payment. The #1 reason people paid their bills late? They forgot. So how do we not forget? Set Reminders - This is a relatively easy fix: set a Google calendar alert or an alarm on your phone. Pick a memorable day of the month to pay your bills. Have a responsible friend give you a reminder text or call. Align Bills - Another organization hack - align the timing of your bills around your paychecks if possible. Most credit card companies allow customers to change the due date of the payment quite easily online. If you are paid at the end of month consider making all bills due sometime in the first week of the following month before you've had a chance to spend everything. Bookmark! - One last practical suggestion is to create a "Bills" folder of bookmarks in your web browser.
I do record my net worth but not monthly. Mostly once per year. And I set reminders for myself too. Didn't do that at first because....sure I can think with my own head. But when lot of things get in a way, you just forgot to do or fix them all. To create bills folder is good idea though.
In the book The Wealthy Barber by Canadian David Chilton he offers some very sage advice. The book is told as a story of a barber who cuts hair, talks to his customers, is not an extravagant man but is in reality very wealthy. When asked how he did it he answered:
Pay yourself first. By this he meant take 10% of your income and put it in savings. Then with the remaining 90% of your income, live your life. Only buy the house you can afford with 90%, the car, the vacation, etc.
Never touch that 10%, that is to pay yourself with later (retirement).
I have been following this advice since the late 80's when the book first came out and it is the one rule I have never broken nor will I. 10% of everything I earn, whether it be fiat, crypto or any other form of monetary gain, 10% is always put away.
For anyone in their 20s looking to invest for their future I highly recommend this book and his followup books. They can change your life.
Avoid credit card/loan debts that make me end up worse off. The only 'debt' I have is to family and they haven't been bothered with it, they know I will pay it back in time and that it always helps me out when I need it and that I would do the same.
But credit card/loans from companies are something I won't do with the exception of if I had to pay for a course or something to help me get a job.
To not touch a credit card and pay for something you can't afford.
If you can't pay cash or pay for an item within the 30 days before credit card fees apply then I won't buy it. There are a few things that don't work and that is purchasing a house and a car.
Purchasing a house you are penalized because of interest rates and I always get ahead of the payments so it brings the interest down. Any other way and you are giving away hard earned money.
When I was younger I had a credit card and learned the hard way with interest rates and it is not worth it. A purchase can cost you double what you paid for it and that is why I have no credit anywhere what so ever.
This one is pretty easy, but it took me a long time to realize it. You should never lend money to family. I know this seems counter intuitive to what you think the roll of your family should be.
We are all raised to believe that a family should be a loving and supportive unit. I dont disagree with that assumption and in perfect world that is exactly as it should be.
The world isn't perfect though and having someone in your family owe you a debt or owing someone else in your family a financial debt can place a strain on the relationship.
When one party doesn't pay off the other party as quickly as they think they should it can create a large amount of distrust and animosity. It just isn't a great idea. Help them out any other way you can, but dont lend them money.
I'll provide two:
I do record my net worth but not monthly. Mostly once per year. And I set reminders for myself too. Didn't do that at first because....sure I can think with my own head. But when lot of things get in a way, you just forgot to do or fix them all. To create bills folder is good idea though.
Pay yourself first.
In the book The Wealthy Barber by Canadian David Chilton he offers some very sage advice. The book is told as a story of a barber who cuts hair, talks to his customers, is not an extravagant man but is in reality very wealthy. When asked how he did it he answered:
Pay yourself first. By this he meant take 10% of your income and put it in savings. Then with the remaining 90% of your income, live your life. Only buy the house you can afford with 90%, the car, the vacation, etc.
Never touch that 10%, that is to pay yourself with later (retirement).
I have been following this advice since the late 80's when the book first came out and it is the one rule I have never broken nor will I. 10% of everything I earn, whether it be fiat, crypto or any other form of monetary gain, 10% is always put away.
For anyone in their 20s looking to invest for their future I highly recommend this book and his followup books. They can change your life.
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Never spend what you haven't earned yet.
Avoid credit card/loan debts that make me end up worse off. The only 'debt' I have is to family and they haven't been bothered with it, they know I will pay it back in time and that it always helps me out when I need it and that I would do the same.
But credit card/loans from companies are something I won't do with the exception of if I had to pay for a course or something to help me get a job.
To not touch a credit card and pay for something you can't afford.
If you can't pay cash or pay for an item within the 30 days before credit card fees apply then I won't buy it. There are a few things that don't work and that is purchasing a house and a car.
Purchasing a house you are penalized because of interest rates and I always get ahead of the payments so it brings the interest down. Any other way and you are giving away hard earned money.
When I was younger I had a credit card and learned the hard way with interest rates and it is not worth it. A purchase can cost you double what you paid for it and that is why I have no credit anywhere what so ever.
This one is pretty easy, but it took me a long time to realize it. You should never lend money to family. I know this seems counter intuitive to what you think the roll of your family should be.
We are all raised to believe that a family should be a loving and supportive unit. I dont disagree with that assumption and in perfect world that is exactly as it should be.
The world isn't perfect though and having someone in your family owe you a debt or owing someone else in your family a financial debt can place a strain on the relationship.
When one party doesn't pay off the other party as quickly as they think they should it can create a large amount of distrust and animosity. It just isn't a great idea. Help them out any other way you can, but dont lend them money.
View this answer on Musing.io