40 of the Best Financial Tips, Ideas, and Actions
To celebrate being named an InvestmentNews 40 under 40, I have compiled a list of 40 tips, ideas and actions. These are all fully fleshed out in my upcoming book, But First, Save10: The One Simple Money Move That Will Change Your Life (you can preorder your signed copy here.) As you can see, all money ideas start with just one. Save 10%.
Save 10% for retirement starting in your 20s -- waiting results in a continuum of difficult to devastation for your future selves.
Don’t include the company retirement plan match in calculating your savings rate. You may leave before vesting, and it does not help in your retirement equation of savings to lifestyle expenses.
Save more if you want to retire early--or to give yourself the option.
Prioritize jobs with retirement plans. Turns out when there is no retirement plan, people are a lot less likely to save.
Target Date Retirement Funds are not lazy investments. They are brilliant ways to invest for retirement.
Don’t buy individual stocks. You can’t win in the long-term, even if you get lucky occasionally. Buy the whole market.
Steer clear of whole life insurance or variable annuities (even or especially if they are sold by friends). They are laden with fees and just mean more of your hard earned money in someone else’s pocket.
DIY your investments. This avoids fees. A 1% fee means you have as much as 30% less money at retirement, and your advisor has that extra 30% in his own retirement.
Save 3-6 months of expenses into an emergency fund--give yourself the ability to walk away.
Top that off if you know you want to start a business--it’s expensive and you need time to make it work.
Leave a job that is toxic or has no path to advancement. Trust in your emergency fund. It is your ticket to freedom and gives you the power over your own future.
Plan ahead for windfalls and write down that plan. Your brain will otherwise spend a windfall 5 different ways before it arrives.
Pay off your credit card debt--remove those shackles.
Avoid credit card debt. Always pay off your balance every month.
Pass on the in-store credit cards. They are not pushing them out of charity.
Have a payoff plan for student loan debt before you take it on. You might take on less or none at all when you see that you might be sentencing your future self to a lifetime of luxury car payments--without the luxury car.
Make and stick to a plan to pay off your student loan debt on your own terms, Some repayment plans are 20-25 years. Who needs that? Slay it.
Open a Health Savings Account (HSA) if you have a high deductible healthcare plan. Spend two years or less building up enough cash to pay the out of pocket (OOP) max. For high earners put money in, but don’t take it out. Invest this money for retirement.
Put 20% down on your new home--don’t ever pay private mortgage insurance.
Renting is a noble sport--don’t let people convince you it’s throwing money away. But choose your rent affordability after steps 1-11 are worked out.
Don’t spend too much on a house--Never spend more than 2x your household income on the cost of a home or 14% of your gross pay on a mortgage payment every month. Anything else will cripple your happiness.
Start a home repair fund- put 1% of the value of the home in that fund every year.
Temper the urge to remodel. If you must, save ahead for it. No, you can’t count on getting your money back from those remodels when you go to sell. Don’t let that be a justification.
Save ahead for your next car. Car payments are not a fact of life. And you can be a patriotic American without a car payment.
Drive your car a loooooong time. Keep saving after you buy your car for repairs and buying the next car.
Drive like your granny. Accidents can take away so much financially. And speeding tickets are the cost of vacations.
For car insurance, load up on liability. If you have number 7, your emergency fund, fully funded, don’t pay high premiums for low comprehensive and collision deductibles.
Buy insurance for what you can’t financially afford to lose. Examples: disability if you need to protect income from a long education like med school or law school, term life if you have children.
Beware the warranties. First figure out if you could end up richer by saving ahead. (Spoiler alert—you will!) And the devil is in the deductible and what’s excluded. Read the fine print.
Take vacations. Money spent on them can bring happiness.
Save ahead for vacations. That will make them way more fun. Plus, if you aren’t motivated to save for them in anticipation, how does it make sense to pay for them after the fact?
For all things you are saving for, save monthly, and automate those savings out of your paycheck or master checking account. You are far more likely to stick to your savings plan with this simple act.
Do a financial plan before you get married. Understand each other’s debt and how you will pay it down as a couple. Commit to a joint savings rate.
Set a budget for your wedding and stick to it. No marriage should have to suffer under the burden of a debt hangover in the first few fragile years.
Know your limits as a bridesmaid or groomsman. Weddings can be expensive for the wedding party. If you can’t find a workaround for what’s affordable, you might have to say no.
The secret to a happy life is low fixed overhead. Be loath to sign up for monthly commitments of any kind.
Review and reduce subscriptions at all times. Monthly subscriptions are the modern day nickel and diming.
Don’t finance your mattress (or other household items). If you get to that point, you are probably suffocating from the weight of the sum total of your monthly payments.
Levelize your bills. Make utilities the same payment every month. All annual fees or payments should be saved ahead on a monthly basis to avoid surprises.
Spend the rest. Literally. And the rest might not be much at first. But as you achieve many of the steps above and make more money over time, that spending account can become quite luxurious. Trust in the system.
Photo by Cathryn Lavery via Unsplash