- Expert Answers (8)
Why spend your life working for money, when you can live your life and have money work for you?
We focus so much on buying a new a car, that once we have it, not only do we have to pay off a huge debt, but that car will slowly lose its value after time.
Instead, use the car to make you money, rent it out, or sign up to Uber or any other taxi service. That way, your car will pay for itself, and continue making you money.
Instead of buying a massive house on credit, buy apartments you can rent out, which will eventually pay for itself and still be making you money.
Ten years down the line, you’re retired, but still have all of the money you want, live in a massive house, have amazing cars and assets that still make money for you.
The best advice I have ever received, is to invest in assets that create passive income.Hikaru Ichi1 weeks ago
Money is difficult to understand. The advice on money is difficult because it all varies from person to person’s expenditures and income.
I will share about my tips or my way of saving money:
Money comes as a salary in your account and gets distributed in various streams like bills, household expenses, personal expenses etc. It is your responsibility how you distribute your money. You need to plan out the amount you earn, how much to be used in expenditure, how much in savings and most importantly how much to be used in investments. It is completely in your hand in how you manage your money!
The best way to grow your money is Investments. People should save a specific amount from their salary and start saving as an investment. It’s a myth set in our mind from childhood that investing in saving account increases your money! But does that really work? Yes it does works, but there is also a term known as “Inflation." The value of money goes down and prices of daily needs go up. As time passes, your saved money won’t have much value in that later period.
So if you are a beginner in investing, follow these tips :
- It does not matter how much you earn, it matters how well you save and invest.
- Choose one fixed amount to be invested from your salary. I used to invest 15% from my salary.
- Control your expenses in order to invest in your future and multiply money from it.
- Do not spend all your savings in one go, plan things you need to buy, save money monthly and then you can spend it.
- Do not increase your spending when you get a raise. Save half of your earning when you get that raise.
Best money advice I've recently found was through a book I just read called the, "Compound Effect."
People are always in debt because they spend more than they make. They rarely save and are not aware of their spending habits. This is like with any habit. Lots of bad habits are done without any thought. To break bad habits you must begin to start tracking your habits.
Ex. If you want to lose weight, track every single thing that goes into your mouth. Start a diet journal.
If you want to be better with your money, track every single cent you spend. Get a small journal and carry it with you. Write down every single thing you spend, every day, for one whole month. When you do this, you will become consciously aware of how much you are actually spending. Then you can start saving properly or making financial plans properly.
Tracking is the important part to help you become aware of your unconscious habits. Whatever bad habit you want to break, write it down and track it every single day for one month. It doesn't have to be paper and pen, you can use your phone, there are great apps for these kind of things. But the point is to get into the habit of tracking.
Hope this helps!Leo Hall
Best money advice from one of the richest men in the world.
When you get your first paycheck.
When you are sitting on plenty of savings.
When you are making investment decisions.Jack Caswell
The 5 rules to being Wealthy:
1. Do not spend money. Invest money.
2. A dollar saved is $20 earned.
3. Never lose money for free.
4. There is such a thing as free lunch.
5. Minimize Risk.
1: Do not spend money. Invest money.
Most people, when making a purchase, ask all the wrong questions.
For instance, when buying a new pair of shoes, do not ask how good they look or what brand they are.
Ask how long they’ll last, and in what kind of weather, and what the warranty is. If you get a good pair of warm waterproof boots with a lifetime warranty, they could literally be the last pair of boots you’ll ever need to buy.
It is much better to buy a $400 winter jacket which will last you 20 years than a $200 one which will last you six. And both of those are better than the $1000 one which will be out of fashion in three.
In other words, there are financial ramifications to every spending decision you make. If you buy an iPhone, will you also need a case for it? How expensive is the data plan?
If you buy a house, how will that impact your taxes? What is the resale value looking like?
2: A dollar saved is $20 earned
This one is pretty simple. If you put $1 in an investment account and wait 40 years, it will become $20.
This is the magic of compound interest.
In practical terms, it means that your go-to option should always be to tighten your belt. Put away some money every week, and it will pay itself back 20x over.
3: Never lose money for free.
Again, a simple rule to understand.
Maximize your tax exemptions. Paying extra tax is losing money for free.
Never ever EVER pay your credit card late. Late fees are losing money for free.
Don’t borrow money*. Paying interest is losing money for free.
Always comparison shop. Why pay more for the same product? That’s losing money for free.
Turn off your heat when you leave the house. Leaving the heat running is losing money for free.**
*Note: There are some occasions when borrowing money is not losing it “for free.” For instance, mortgage payments can be tax-deductible. In these cases, sit down with a calculator. Doing the math wrong (or worse, not doing it at all) is losing money for free.
4: There IS such a thing as free lunch.
Actually, the original rule is “free lunches are everywhere,” but that isn’t quite so catchy.
For instance, credit cards often offer rebates on purchases. I have one that offers 5% back on select categories each quarter. Actually, I have 4 of them from different companies.
Every few months, I write on them in sharpie what categories they’re giving me discounts on. Every time I make a purchase, I use the one which gives me the biggest rebate.
Congrats, I just got 5% back on life.
And it’s not just credit cards. Just this morning, I just got sent a promotion where I get $300 back for opening a new bank account. Of course, the devil’s all in the small print. Yearly fees, etc etc. Which would be really bad (see rule #3), except I’m going to cancel the account the second they deposit the money. Thanks for the free $300.
** Dad used to tell us how he would turn the heat off in his apartment entirely and simply leave his door open to steal heat from the hallway.
5: Minimize Risk
There is a law called the “law of diminishing returns.”
The more of something you have, the less it matters.
The same is true of money and happiness.
If you have $0 and I gave you $100,000, it will change your life. You will be overjoyed. If you have a million dollars and I give you $100,000, you’ll barely notice.
This is why taking risks is rarely worth it.
When you win big, you are rarely much happier. But if you lose big, it’s a disaster. There’s a reason the trope about stock brokers jumping from windows exists.
One of the big problems with how people think about money is that they only tend to hear about the big successes, never the big failures. We think of rich people as musical artists, entrepreneurs, pro athletes, and stock traders, because most of the richest people belong to those groups.
But you never hear about all the ones who tried and failed.
Meanwhile, you can be almost exactly as happy with “only” a few million, which is something very achievable by skilled laborers. Tell a doctor or a lawyer that they ought to be miserable because they’re “only” making six figures, and I guarantee they’ll laugh at you.Yao ZhangHere are some quick Tips!
- Avoid debt - apart from maybe student debt
- Don’t be overly influenced by your peers or culture - unless what is being said is academically tested
- Save and invest early - to compound
- Don’t speculate - don't be taken in by get-rich-quick schemes
- You can be a millionaire on a middle-class salary - focus on getting skills the market will pay for
- Don’t worry now - assuming you are under 21. If you are over 21, it is good to get prepared
- Watch your spending habits - they are more important than your income. Track it.
- Most importantly of all, read finance books, and then follow it. Read books by Ramit Seti and John Bogle.
8 Best Money Advice Tips that Everybody Should Know
- Income: What You Earn Every Month
The #1 most valuable asset you have is your income, your ability to make money month in and month out. Everything you do should be focused on increasing that amount, maintaining that amount, and preserving and protecting a 50-year stream of it from age 20–70. Everything you do — from choice of careers, choice of college, to choice of what city to live in — will all determine what your income is.
- Debt: What You Owe Others
The #2 most valuable tip is to live debt free from day one. NEVER get into the debt trap. If you have a $10,000 balance on a credit card that is a 29.9% APR interest rate, that creates a $3,000 per year impact on your life. $300 per month may not seem like a lot, but over 10 years, that $30,000 in payments would have grown to well over $60,000 if you had invested it well. If you were to maintain that amount of debt over all 50 years of earning, then you would have not only thrown away the $150,000 you would have paid, but you would have also missed out on the $1.3M that that $150,000 would have become if you had invested it. Paying off debt has the net effect of an immediate return that is equal to the credit card rate of interest. Where else can you get a guaranteed 30% return? Nowhere!
- Monthly Expenses: How Much You Pay Out Each Month
The next most important idea is to live frugally on a fraction of what you make in income. My recommendation is that your total expenses should not be more than 50% of what you make. However most Americans are not willing to make that sacrifice. In that case, the breakdown should be as follows given the ranges from low to high percentages necessary for success on the low end, or survival on the high end.
- Housing: 25%-50% of Income
Typically the #1 most expensive choice we will ever make. Ironically it is also the least understood in proper terms. You work 8–10 hours a day, usually at an office. You sleep 6–8 hours and you get ready for work and ready for bed 1–2 hours per day. That means that 15–20 hours per day, you aren’t even using anything more than your bedroom and bathroom. That means that the other X,XXX number of square feet of your house is a needless expense. My best deal ever was the apartment I had in Graduate School. It was a small two room apartment with a galley-style kitchen in between — it was amazing. $250 per month. Damn, was it a steal.
- Food: 10%-20% of Income
If you are single this number can be very different than if you have a family, but generally speaking you should never eat out or at least limit it to “date night” once per week, but even $100 per week in eating out is over $5,000 per year, and the 50 year impact to your savings and investing is $2.17M over 50 years. Don’t eat out.
- Cars: 0%-20% of Income
Despite rumors to the contrary, you do not need the latest and greatest car to survive. I hate car payments since they are the #1 killer of income after eating out. Many car payments are easily $500 per month these days and over $5,000 per year. That is a $2.17M impact over 50 years. Buy cars with cash and never have a car payment. Take it from me — I pissed away over $2M over 27 years on cars, and that $2M now would be worth over $20M if I had learned this in my 20s. Don’t make the same mistakes I did.
- Utilities and Phone: 5%-10% of Income
If you are renting, getting power, water and other utilities included in your rent is the way to go. My little $250 per month apartment I had for 7 years included everything except cable, and I loved it. Also, news flash: That latest iPhone for $1,099 that you “can’t live without” is costing you $40 per month for 2 years, and if you can’t pay cash for it, don’t buy it. That $40 per month well invested is another $200,000 over 50 years.
- Savings and Investing: 0%-30% of Income
Well if you have been keeping up with the ranges, if you were at the high side of spending for every category, congratulations — you have $0 and 0% left for savings and investing, and you are going to die broke and alone. That’s OK — in the US, you will have plenty of company, since 98–99 people out of 100 are in the same boat. Misery does indeed love company. If you keep the low side, you may be amazed that you now have 30% of your income left to save and invest. Congratulations — welcome to the top 1%-2% of people in the US! These are called “The Evil Rich People.” Don’t be offended at the title, just laugh your ass off all the way to the bank. While others have enjoyed their $70 steak and lobster and their $100 bar tab, you are going to be enjoying your golden years not eating Alpo and looking for dropped coins in the Walmart parking lot. If you get to this point you will have won. If you just did #2, #5, #6 and #7, you you have saved a staggering $5.9M over 50 years. Enjoy. You now can do whatever the hell you want to do in retirement.
Understand Finance and Accounting!
- Learn Accounting - It is financial literacy or the ability to read numbers.
This is a vital skill, if you want to build an empire. The more money you are responsible for, the more accuracy is required or the whole house comes trembling down.
Financial literacy is the ability to read and understand financial statements which allow you to identify the strengths and weaknesses of any business.
- Understand Taxes - An individual should understand and learn how taxes work. One should understand and find out the sectors of savings and rebates and should know about taxes. This will improve the scope of investment and you will be aware of your tax benefits.
- Money matters - Yes money matters and its important for you to save money for your future. No matter how much you are earning now, if you are not saving enough money for your future or emergency situations, you may regret that later.
- 30 day rule - If you are going to buy something, try to put it on your 30 days list. Write it down and wait for the next 30 days without buying it. If you can survive without it for 30 days, then probably you don't need to buy it anymore.
- Avoid Credit cards - If you want to avoid buying useless stuff, I suggest you stay away from credit cards. Use your debit cards, this will let you only spend what you can afford and not allow you to go beyond your limits.
- Understand Markets and Investments - Investing is the science of “Making Money”. Understanding the markets is the source of supply and demand. You need to know the technical aspects of the market, You will be able to understand whether an investment makes sense or does it not make sense based on the current market conditions.
- Spend Wisely - If you really need something and it's very important, buy it, even if it's available for more than the usual price but if you don't need something, please don't buy it even for a discounted price. If you kept buying unnecessary things, soon you will have to sell your important things to compensate.
- Set a realistic savings goal - Start by setting a savings goal. It should be measurable, realistic and timely. You might feel ambitious and set a super-high savings goal, but you’d likely be setting yourself up for failure.