If you have never really thought about where your money goes, you may not know where to start to get better at it. Do you start saving first? Do you pay off your debts? Does it all seem overwhelming? If you find yourself in that predicament, you may just want to try implementing the following three finance tips today.
1. Simplify, Simplify, Simplify
According to Mint.com, many billionaires live simple lives. They invest in solid products without concerning themselves what others think about their financial decisions. For example, Warren Buffett has owned the same house since 1957. He bought the home for just over $31,000 and has lived in it since then.
He also keeps his investments simple. He doesn’t put his money in companies that carry products that are subject to change and market volatility. Instead he invests in companies with a solid financial record and good products that aren’t subject to the whims of the current trends.
Other wealthy people still take public transportation and make wise decisions when it comes to car. A simple car is a better car. And a used car is better than a new one. Jim Walton of the Walmart Company still drives the truck he bought 15 years ago. By not shopping as often and by keeping their routines and their purchases simple, these millionaires and billionaires can save much more money. You can implement a program like this, too.
2. Pay Yourself First
Let’s face it. There’s always going to be someone who wants your money. Bankrate.com wrote about Dr. Wayne Dyer’s experience with saving money. Dyer said that someone tole him to pay himself first. Dyer counted this as the best advice he’s ever gotten about money.
Dyer recounts the time he was in Guam in the navy. He save 90 percent of the money he made for the 18 months he lived there. When he came home, he found that he not only had enough money to pay for a car but for the first four years of college.
He recommends saving between 10 and 30 percent of your check until retirement age. However, you won’t have to be retirement age to enjoy what you have. You’ll be financially independent long before your retirement age comes.
3. Have an Emergency Fund
Want to not have so many financial surprises? Then start an emergency fund. That’s the advice that Investopedia.com gives its readers.
If you’re not exactly sure how big your emergency fund should be, you can take Dave Ramsey’s advice. In his book, “The Total Money Makeover,” Ramsey suggests that people save a thousand dollars for just this purpose.
It’s also important to use the money for emergencies not vacations or frivolous purchases. It’s truly for when your furnace breaks or you need car repairs. If you build these eventualities into your budget, you won’t have to borrow for them. You’ll also be less likely to be negatively affected by these unexpected mishaps.
Parting Thoughts About Creating Solid Finances
Having a solid financial foundation isn’t just a one-off thing. You need to implement good financial practices daily. Paying yourself first, starting an emergency fund, and simplifying your life are good places to start when it comes to financial planning.
David Milberg is a financial expert in NYC with nearly 3 decades of experience in the finance industry. He is a long-time owner of Milberg Factors, a factoring and finance company with locations in New York, California, and North Carolina.