- Invest 15% of everything they make in index funds and well-performing growth stock mutual funds. This is a great way to ensure long-term growth and stability in your investments. What do I invest in? Besides offerings through my own institutions, I use American Funds and Vanguard Funds. I like both of them, but they have their different styles. By the way, check out the mountain chart in the American Funds link to understand why you should invest.
- Pay off student loans as soon as possible. Student loans can be a heavy financial burden, and getting rid of them should be a top priority.
- Have a Will in place. It’s not fun to think about, but everyone has a 100% chance of dying, and it’s important to plan for what will happen to your assets and loved ones after you’re gone.
- Have an emergency fund worth 2-4 months of expenses. Emergencies happen, and it’s important to be prepared for them financially. Crap happens. It really does. Have money set aside for it. I used to think this was a waste of resources, but have slack resources just in case is very important for managing your ‘corporation’ of your house. Managing your home like a business is important the success of your home.
- Invest in projects that bring you joy and growth opportunities. It’s important to plan for a time when you’re not working, and investing in hobbies and interests can bring long-term happiness and fulfillment. Frankly, I don’t know why you would not plan for the time when you are not going to work. Start at it today.
- Have decent health insurance. Unplanned medical emergencies can be devastating financially, so it’s important to have insurance in place to protect yourself and your loved ones.
- Save for long-term projects and upkeep of assets like your home. Depreciation is a normal part of owning assets, and it’s important to plan for the maintenance and upkeep of these assets. Surprisingly, most people do not consider that you should plan for the depreciation of your assets.
- Have regular conversations about money with your partner. Regularly discussing your financial goals and plans can help ensure that you’re on the same page and working towards common goals. Admittedly, I need to have more of these, but once you have enough conversations about money, you can get into a groove with conversations. My wife and I only spend about 1/2 hour each month doing this kind of stuff, but it really helps to make sure we are on track financially.
- Avoid car leases and save for car purchases instead. Car leases can be financially detrimental due to high interest rates, and it’s better to save up and buy a car outright. We only buy and keep cars for 10 years or so. This allows us to save up for each purchase.
- Avoid having more than one credit card. Credit card companies are very successful for a reason. Your behavior is that reason. You cannot outsmart the credit card companies. Be wise with credit, or avoid it all together.
- Bonus!! Read a personal finance book and dream about your future. I like the Wealthy Barber and Dave Ramsey (however, his blurring the boundaries between finances, politics, and religion makes me very uncomfortable). I would suggest that you do basic personal finance books, and then move from there. You don’t not need how to learn how to trade stocks. This is dumb, and you will get burned. Learn how to manage a basic household.
If you do this, you should be set for a long and prosperous life. The problem is that most of you will read this, and never do it. Too bad – you are going to miss out on some amazing opportunities.