If you know nothing about money, what would be the five most important things to know? That’s the question I got from a friend of mine the other day. And what a great question it is! Of course, I gave her my honest thoughts. Today I share these thoughts with you.
Don’t Do Debt (Get Out As Fast As You Can If You Do Have Debt)
Here’s one of the most important financial truths: debt is a trap. The more you borrow, the more you owe, and the longer it takes to break free. So, if you can avoid debt, do it. It’s like that advice your parents gave you about not touching a hot stove.
Unfortunately, sometimes life happens, and debt sneaks up on you. Maybe it was that credit card balance that got out of control, or an unexpected expense that threw off your budget. If you find yourself in debt, there is only one thing left to do: get out. And fast. The longer you let debt linger, the more interest you’ll pay, and the harder it becomes to climb out of the hole.
That said, there are two exceptions where debt can be good: buying a house and investing in a profitable business. A mortgage can be a good kind of debt: it helps you own an appreciating asset (your home) that can build equity over time. Similarly, borrowing to grow a profitable business can lead to bigger returns in the long run.
So, stay away from debt. And if you must take it on, make sure it’s helping you build a future.
Start Investing As Soon As You Can (Time is Your Best Friend in Building Wealth)
If there’s one piece of financial advice you should take to heart, it’s this: start investing as soon as you can. Why? Because time is the ultimate wealth-building tool. The earlier you start, the more time your money has to grow, thanks to the magic of compound interest. Even small investments can snowball into significant amounts over time.
Here’s the good news: investing doesn’t have to be complicated or risky. In fact, saving is just a very safe form of investment. By setting money aside in a savings account or a low-risk investment, you’re still building your wealth, just with a little more stability and less risk.
The key is to start early. Whether it’s stocks, bonds, or simply a high-yield savings account, the longer your money stays invested, the harder it works for you. So, don’t wait for the “perfect” moment or a bigger paycheck. Start investing today, and let time do the heavy lifting for your future wealth.
Spend As Much As You Like (But Stay Within Your Means)
Here’s the golden rule for you: spend as much as you like, just make sure it’s less than you earn. Sounds simple, right? It’s all about living below your means, which sets the foundation for long-term financial stability. Whether you’re grabbing your morning latte or planning a long getaway, it’s totally fine—as long as you’re not dipping into funds you don’t have.
Oh yes, YOLO, enjoy the moment and don’t think about tomorrow! And yet life (if you’re lucky) is long, and you’ll want to be able to enjoy all of it! This means having enough funds not just for today’s adventures, but also for tomorrow’s excitement.
That’s why the money you have now should also be working for your future self. Think about it: today’s savings fuel tomorrow’s adventures. Retirement may seem a long way off, but when it comes, you’ll be thankful for every penny you set aside.
Living well today and tomorrow isn’t about cutting out all the fun—it’s about balancing. Once you understand your money flow, you can make informed decisions that allow you to enjoy life now while still preparing for a future filled with new adventures. After all, you only live once, and with smart spending, you’ll be able to live all of it.
Hide Your Money (So You’re Not Tempted to Spend More Than You Should)
Do you ever feel like you spend a little too quickly when your money is right at your fingertips? Yeah, we’ve all been there. The solution? Make your money harder to access.
Picture this: you’ve got $100 in your wallet. Tempting, right? Now imagine that same $100 locked away in a safe, out of sight and out of mind. Which one are you more likely to dip into for an impulse buy? Exactly.
You can apply the same idea to the money in your bank account. Consider opening a second account and moving some funds there. After that, just let it be. Remove the banking app from your phone and store the statements away in a box. Simply don’t check it again.
This extra layer of “difficulty” can be your secret weapon against impulsive spending. By setting it up this way you make it hard to access your money. You give yourself the gift of time—the time to think twice before making a withdrawal and spend too much.
So, go ahead and lock it up! Your future self will thank you for it.
Have a Money Plan and Celebrate Your Wins!
When it comes to achieving your money goal having a plan is crucial. It will guide you toward success. Without it, you will find yourself lost, and wondering why you’re not getting anywhere.
But, it’s not just about having a plan. It’s also about celebrating your milestones along the way. Each step you take toward your goal is a victory worth recognizing. Whether it’s treating yourself to a small reward (not too expensive😊) or throwing a mini-celebration. Acknowledging your efforts fuels motivation and keeps you going.
So, how to create a plan? Start by outlining your goals, be specific! Break them down into manageable steps, and set deadlines to keep yourself accountable. Then, as you check off those tasks, take a moment to celebrate!
Remember, the journey to your goals is just as important as the destination. With a well-thought-out plan and a commitment to celebrating your achievements, you’ll not only reach your money goals but also enjoy the ride along the way!
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