The Best Financial Advices I received to save money and increase wealth

Do you want to become wealthy?

Do you like saving money easily? 

I collected some tips which can help us do better financially. I believe that you can be richer than those who earn more than you if you handle finances well.

Here are some of the tips that can help beginners to start thinking of ways to begin the journey of becoming wealthy. 

Never buy Whole or Universal Life Insurance. Always buy Term Life insurance. 

Don’t feel shy or embarrassed to live frugally.

Don’t take financial advice from broke people.

Stay away from malls.

Never co-sign someone’s loan.

Start contributing to 401(k) and max it out as soon as possible. This is more true for people with high salaries and the employer matches dollar to dollar up to 5% of the salary. Basically, if you put $18K, the employer puts an other $18K.

It’s not how much you make, it’s how much you save.

Have more assets than liabilities. An asset is something that puts money into your pocket. A liability is something that takes money out of your pocket.

Don’t lend money with the expectation of getting it back.

Don’t buy stuff and fill your house. Do not buy things that you absolutely do not need as they fill the house and cause clutter. 

Make your savings automatic. Pay yourself first.

Don’t put all your savings or investments in one basket. Diversify so that if one investment does not do well, you have others which can do well. For any one, however careful they are, not all investments do well. One or two may not do well. 

Invest early in life to give a chance for compound interest to work magic on your investments rather than buying a big house, costly car and expensive vacations in the beginning of career. 

Do not keep up with joneses. Comparing your life with others and increasing your spending to look rich like others is a big NO. 

Before buying anything, think about Alternate Opportunity Cost. “What if I invest this money instead of buying this now, how much this would end up being in 10-15 years?” 

Use services like EBATES, Ibotta or Joinhoney to get discounts and get cash back.

Don’t keep buying loads of kids books. Borrow from library and return them. 

Photo by Colin Watts on Unsplash

Keep family and friends separate from business.

Learn to live on half your income. Invest the rest.

Understand the difference between “Wants” vs “Needs” and teach that to your kids.

Buy house close to work place if possible. Buy a house based on need and not what the mortgage company says you can afford.

Buy a home on one person’s income so you are not stressed out to pay mortgage even if one person loses job. This gives a lot of mental peace.

Keep your fixed costs down. Stop memberships that you do not use much.

Make a budget. Every decision you make with money either shortens or lengthens your mandatory working career.\

New cars are a HUGE expense. Try to buy 2-3 year old car which is in an excellent shape.

NEVER pay interest you can avoid. Always try to avoid paying interest especially with credit cards except mortgage where it may be difficult to not pay interest.

Pursue private colleges that are after you because they generally have big endowments and offer better financial aid than state schools. This is important for a kid from a low income family. Learn about endowments and how college financial aid works. Bottom line is to avoid coming out of college with huge student loans.

Begin with the end in mind. Think about how you want things when you retire. Start planning from now.

Be fearful when others are greedy, and greedy when others are fearful. This pertains to those who buy stocks. If others are greedy when stocks go up in price, try to sell and make money. If others are fearful and stocks plummet, that is the time to buy stocks at a discount.

Do not copy others’ financial investing style if you come to know that they did well doing a particular thing. How an investment does all depends on timing and luck. You may not be equally lucky or that may not work with the current market.

Read at least once personal finance book. I read Millionaire Next Door, Rich Dad Poor Dad, I Will Teach You To Be Rich, Total Money Make Over and a few more books. This will help you to be frugal with pride.

As always, protect your primary source of your income-Your health.
Life is short. Live your best life and don’t worry about what other people think

“If you live like no one else [Frugally], later you can live like no one else [Rich]”- Dave Ramsey

But always be happy with what you have. Contentment makes poor men rich; Discontentment makes rich men poor.

I am not a financial adviser. But, We followed the above rules and saved enough money to feel very comfortable in life today. These are our experiences and are not an advice to you. Consult a financial adviser if you want personalized advice.

Read: 401K and how much one can do.

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