Why Didn’t They Teach Me This in School?: 99 Personal Money Management Principles to Live By
by Cary Siegel
Life Lesson
- Don’t surprise your partner by changing your financial habits when you’re married. Money is one of the biggest things that couples fight about.
- The quickest way to financial downfall is divorce. At best, you split your money in half.
- Aside from education, childcare, healthcare, food, and clothing, you must provide a larger house, larger car, higher utility bills, entertainment, sports, and other utilities for your child.
- If you always live below your means, you will always have extra money to save and invest. Over the years that money will continue to grow, and you’ll have financial security.
- The cost of maintenance and repairs can be significant in the short term. But the cost of not maintaining and repairing “stuff” is much more significant in the long run.
- Those who don’t get involved in financial careers will have personal money management experience you can learn from. But don’t have a friend as your investment advisor.
- Think of your first job as an extension of college learning, but where the company is paying you to learn. This will put you at an advantage both in your career and financially.
- Consult the Internet, your library, your company, a mentor, and friends and family, and spend one hour a week learning about personal finance.
- Get rich slowly and enjoy the journey to wealth. If you work slowly for the almighty dollar and ultimate wealth, you may not enjoy the journey.
- Set realistic and attainable financial goals. Set them both monthly and annually and periodically analyze them to see what you achieved and what you missed.
- Long term financial goals are easy to lose track of, so relentlessly set and recalibrate them. They will provide you with a purpose for working hard.
- Always know your net worth. Add up everything you own and subtract everything you owe.
Budgeting and Saving Lesson
- Develop a written budget and evaluate it every single month. Ensure that more money comes in than goes out.
- What goes in includes salary, bonus and commissions, dividends and interests, and gifts. What goes out includes housing, utilities, automobile, food, entertainment, insurance, loans, charity, savings, 401K, and miscellaneous expenses.
- In December, tally up your income and expenses for the current year and then forecast for the next year. Develop a net worth statement for this year, and then one for the following year. Ascertaining your financial health will let you develop strategies for managing it.
- Save and invest half of every salary increase. Remember that you were living on your old salary before you got a raise.
- Save 90% of every bonus or non-planned income, including inheritances or tax refunds. If you take the attitude that it is found money, you tend to waste it rather than use it wisely.
- Understand the value of your employee benefits, such as health insurance, vacation and personal days, long-term and short-term disability, 401K plans, bonus plans, and stock options.
- Have an emergency fund to cover unexpected automobile, medical, prescription, home maintenance and repair, and veterinary expenses. This will save you both stress and money.
- Take one month every year and strip your spending down to the bare essentials. This will show you how difficult or easy it is to do, and puts your priorities in order. Consider January to balance out the holiday spending.
- There is always a coupon that saves you money on stuff that you’re already buying. More importantly, don’t buy products just because they are discounted.
- When doing work on your home, get two or three estimates and play them off of each other. Also see how much you can save by paying cash for things.
- A large percentage of consumer rebates are not redeemed, so fill one out and send it in immediately, even if the company says you have thirty days or so.
- Focusing on spending is contagious. Budgeting and net worth statements can serve as the “scorecards” of your achievement.
Spending Lesson
- Do not keep up with the Joneses. The only people you ultimately answer to are you and your family. You must recognize that there will always be people who live better than you.
- Don’t think only of the purchase price of your car, but it’s total cost of ownership. Some are one-time, and others are recurring. Some are also unexpected.
- Prioritize your wants and needs. As an aside, if you do not make savings a top priority of yours, then it will never happen. So ensure that it is a top priority of yours.
- If something sounds too good to be true, it probably is. Stay away from it. Strangers aren’t just going to give you something for nothing.
- Be wary of small bargains. Consider its discounted price versus first price, utility, quality, and difficulty in acquiring the bargain. If it’s something you don’t need, then use your willpower.