The U.S. based Free Money Finance has been running a great series of articles featuring the top single piece of advice from 5 personal finance experts. Although only brief, I think they’re all worth taking note of as they provide the basis for looking after your money.
Here’s a rundown of each of the articles (with a link given to the main article so you can read more):
1. Find a balance.
Eric Tyson, author of Personal Finance For Dummies, suggests that like everything in life, your finances should be balanced – there’s no point being the richest man in the graveyard, but over-spending and being saddled with crippling debt should also be avoided.
Invest in your relationships with family, friends, and in your health – without these, all the money in the world won’t be worth having.
2. Spend less than you earn.
This may sound obvious, but it is an important rule to remember. By saving part of your income, you will have something to fall back on when the situation dictates that you must one day spend more than you earn.
Spend less than you earn. That’s how rich people got rich.
Easier said than done, and probably what we’re all aiming for to one extent or other.
3. Work with a fee-based advisor.
This point is probably more appropriate to the U.S., as in the U.K. there is already a general movement towards fee-based advice anyway, after a fair amount of controversy regarding commission-taking advisors, who would (in some cases) recommend products based on how much commission they (the advisor) are likely to receive from them. Certainly a point worth taking into account, and should be remembered when choosing a financial advisor.
4. Start now.
Planning your financial security should start as soon as possible – we’re constantly being reminded that the provision of a decent state pension will become more and more difficult – the sooner we can start investing in a pension and building up savings, amongst other things, the better.
Start now, invest regularly, keep commissions low, and enjoy yourself.
5. Focus on what you can control.
Jonathan Clements, personal finance columnist at the Wall Street Journal, argues that we should not concentrate on the things we cannot control, such as stock markets. Focus on the areas we can control, such as keeping investment costs down and minimising tax.