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Apologies to some if these may be too basic, but it's a good baseline for younger people to start out with.
[LIST=1][*] Set a monthly budget on an app, spreadsheet or notebook.[*] Spend less than you earn. Save a portion of your income.[*] Have an emergency fund to cover 3-6 months of basic living expenses.[*] Buying things outright is usually than monthly payments. For example, saving up that emergency fund means you can pay $600 for 6 months of car insurance, instead of $125 a month[*] Have a few credit cards. Make purchases, even small ones, and pay them off promptly. Over years, this will build your credit.[*] Before going to college, know what you want to do, pick a major that’s in demand, and have a plan of what steps you need to take to get into that industry.[*] Cars are a depreciating asset, and they depreciate the most in the first 2 years. This current market may be an exception, but in normal cases the sweetspot is buying a 2-8 year old car. But always check the service history and do a pre-purchase inspection with a mechanic before buying used.[*] Buy a car from a brand that's known to be practical and reliable with widely accessible parts (i.e. Toyota, Honda). If you don't need the space, you can consider a sedan instead of a SUV for lower price.[*] Calculate the cost of renting vs owning a home for your specific circumstance. With a mortgage, you build equity but you have to pay for home insurance, HOA, maintainance, etc.[*] Before you marry someone, have in-depth conversations with them about finances. Get an understanding of their income, assets, spending habits, debt. Make sure they’re financially responsible, and that you both share the same values and goals financially.[*] When investing, put the majority of your portfolio in lower-risk investments (i.e. index funds). And diversify; don’t put everything into just 1 or 2 industries. Industries can crash and you don’t want to be left with nothing.[*] Don't gamble or do scratchoffs/lotteries. This should go without saying, but the companies did the math; they are designed to take in more money than they give out.[*] Avoid impulse buys by having a waiting list. If you want to buy something, add it to a list. Wait 2 weeks, a month or however long. If you still want it, buy it. But in many cases, you realize you don't actually need it. [*] Just because an item is on sale by a large margin doesn't mean you need. If it's something you've wanted for a while and it's a lower price, it's a good buy. But if it's something you never really had interest in and suddenly its on sale, then it may just be an impulse buy. [*] Your time is worth money too. For example, spending an extra hour of time to save $20-30 may be worth it, but not to save $5.[*] Limit your alcohol intake. When people get drunk, they can be very happy and spend a lot of money on things that they later regret when they’re sober.[*] Keep track of your monthly subscriptions. Only pay for what you actively use. Rotate your monthly subscriptions (i.e. streaming services). Subscribe to 1-2 this month, cancel them, and then subscribe to other ones next month. [*] No one is perfect. Everyone makes some mistakes and wastes money here and there; don't beat yourself up. It's okay to splurge a little bit every now and then. Especially on things that can turn out to be valuable life experiences (i.e. travelling, road trips, social events, pursuing your passions), so that you have no regrets.[*] Spending money on designer clothes, luxury cars, etc. to impress people isn't worth it. It's not necessary for the people who like you for who you are, won't care. And to be honest, most people are so enveloped in their own lives, that your Hermes belt is the last thing on their minds.[*] Loaning money to people is unwise. They should have savings or access to credit. If they don't, that means they're very high risk to loan money to. Also consider that if they're asking you, they're also borrowing money from other people, and they may have other people they already owe money to.[*] You have the right to say no. Whether it's a pushy salesperson, or any person pressuring you to buy something, or someone asking you to loan them money. General rule of thumb is to not make financial decisions under pressure.[*] Don’t trust a gentleman’s agreement. If a transaction isn't in legally binding writing or on a secure platform of some kind, it's not legitimate.[*] Being frugal and limiting spending is nice, but it's equally or more important to learn new skills (i.e. education, trades or certifications) so you can raise your income. raise your income. [/LIST]
Many of these things are things people should start doing in their 20's and 30's but many don't due to lack of maturity. Overall these are rules people should try and follow but life throws curve balls and things don't always work out according to plan. Living beneath ones means is always a good idea.
Good list.
I would add take advantage of your employers retirement plans and Gov IRA's.
Consider your need for life insurance, health insurance and disability insurance.
Estate planning, especially if you have small children.
The best advice I can give (and wish I gave to myself much earlier) is buy property as early as you can. If you want to rent, buy an investment property then. You might not have a lot of money when you're young, but you have time on your hand. The United States market has shifted drastically, and there will be two classes of the people, the land owners and renters.
Also, you do not need 20% down, in most scenarios 3.5-5% is all that you need. Most first time homeowners do not have 20% down, but most 2nd+ homeowners do as they built equity into their property. I'd also recommend putting money into a Roth 401k/IRA when you're younger, as you can pull that money out to buy a home.
The best advice I can give (and wish I gave to myself much earlier) is buy property as early as you can. If you want to rent, buy an investment property then. You might not have a lot of money when you're young, but you have time on your hand. The United States market has shifted drastically, and there will be two classes of the people, the land owners and renters.
Also, you do not need 20% down, in most scenarios 3.5-5% is all that you need. Most first time homeowners do not have 20% down, but most 2nd+ homeowners do as they built equity into their property. I'd also recommend putting money into a Roth 401k/IRA when you're younger, as you can pull that money out to buy a home.
If I could get all of my employer's 401K matching $ employees are willingly and knowingly giving up by not contributing to their 401K I'd have Musk and Bezos working as my butlers.
Spend less than you earn.
Invest savings in vehicles that grow faster than inflation.
Don't use high-interest-rate consumer debt.
If it seems too good to be true, it probably is.
I mean, honestly, if your whole approach to life is going to be based on financial security at an upper-middle class level, then just sacrifice the years of your life between roughly ages 8 and 26 and become a doctor or dentist. Preferably dentist.
Then you don't have to worry about any of this garbage.
That's the 1st generation Asian mentality. Obsession with financial security and that's why so many parents push their kids to be doctors.
Note ... I didn't say that creates a perfect life or that those kids who did become doctors and dentists thought that was such a good idea that they will push their kids to do the same.
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