Personal finance and online investing is one of those subjects where you can find as much nonsense as good advice. Sometimes it’s hard to perceive the differences between financial direction and the next get rich quick scheme. There hundreds of advices on how to became rich. Some of them work, some don’t . But if you really want to be sure you finish rich there are only three rules you need to follow. We can’t give you a guarantee that you’ll be as rich as Donald Trump but following this tips you’ll definitely become richer.
1. Spend less than you earn.
This is the best advise. If your money is running out long before you get your salary at the end of the month then you have a problem. The best way out is to record your spending and then cutback. In every budget there is a slack. Find it and cut it out. It doesn’t mean you have to go back to the Stone Age lifestyle. You only need to make sure that you live within your means.
2. Put 10% of everything you make into the bank.
The best way of describing why you should place 10% of your salary into a savings fund was written down many years ago in the book “The Richest Man in Babylon” by George S Clason: “Now I will tell a strange truth, the reason for which I know not. When I ceased to pay out more than nine tenths of my earnings, I managed to get along just as well. I was not shorter than before. Also, ere long, did coins come to me more easily than before. Surely it is a law of the Gods that unto him that keepeth and spendeth not a certain part of all his earnings, shall gold come more easily. Likewise, him whose purse is empty does gold avoid.
3. Don’t miss payments.
By missing payments you do not only leave yourself open to missed payment fees but you will also ruin your credit record. Just one missed payment leaves a blot on your record that can take a long, long time to come off. Having missed payments on your credit record means that you are less likely to get the best rates that banks have available. Your mortgage will suddenly be Ј600 a month instead of Ј550 a month. Your car loan will be Ј109 instead of Ј92. This might not mean a lot over a single month but when you multiply these extra costs over a 3year or 25year period then you suddenly begin to see how much you can get punished for a really small error. Jealously guard your credit report to ensure this doesn’t happen to you.
Personal finance is a simple thing at heart. Spend less than you earn, save 10% and make sure you pay your bills on time. Everything else is simply icing on the cake.