No matter how little or how much you have, you can always find ways to save your money. My parents were able to turn $20 into over $1 million in less than 20 years.
How? One penny at a time.
Here's a list of the best financial advice they've given me that can help you become financially well off now and into the future.
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Live below your means
Don't spend what you don't have. This might mean challenging yourself with your money by eating out less or finding creative ways to entertain yourself for free or cheap.
Remember, it's much easier to avoid getting yourself into debt than to get yourself out of it.
And even when you do have enough money, you can still choose not to spend all of it!
Invest in good debt wisely
There are some things that are worth getting into debt to for. But you should also do it within reason.
Yes, you should get a college education, but if you accumulate $100,000 for a degree that you don't end up using, is it worth it?
Same with a house; if you're fortunate to buy one, choose one that fits your needs.
One kind of debt that should always be avoided? Credit card debt. Always pay your balances IN FULL.
The earlier you start building a credit history, the better it will be for you down the road when you do make purchases that matter.
Start off with bank accounts, then move onto credit cards. Don't miss payments and, because it's worth stating again, always pay your balances in full.
Don't buy things right away
You should do this for several reasons:
- First, you tend to regret impulse purchases.
- Second, shop around. You can almost always find a better deal or wait until it goes on sale.
- Third, if you can walk away and wait a week before you actually buy something, chances are you'll find that you actually can do without it.
Take advantage of free or discounted items
More often than not, you can avoid paying full price.
It's easy to save money shopping online, like using Rakuten (formerly called Ebates), a cashback shopping site* (first-time users get $10 in cash back or in a gift card), or Raise, for discounted merchant gift cards* (first-time users get $5 off).
Just because you can afford something doesn't mean you should buy itSometimes you want to buy things that you want rather than need. While I'm not suggesting that you never buy things you want, you really ought to weigh if you need something before you buy it. Example: do you really need to buy the latest phone model every time a new one comes out?
Put away in your retirement savingsYou might think that retirement is far away, but you really ought to be contributing to your retirement when you're young. Your dollar will be worth much more the sooner you put towards it than if you were to wait until you near retirement to save for it.
Let your money work for you
Don't let your money sit under a mattress. A dollar is only worth a dollar there. At the very least, put your money in a savings account where you can earn some interest on it.
You should also look into investments (CDs, mutual funds, etc) to let your money grow. Especially if you're young with time on your side, your money can really grow if you invest it correctly.
Put extra money towards your debt
If you do have extra money left after your expenses, pay them towards your debt to cut down the interest you owe and the time of your loan(s).
Pay with credit card
With enticing welcome bonuses and perks like travel points and cash back, pay with credit card whenever possible to get rewarded for your spending.
Whether you're starting out with a beginner credit card rewards program or juggling multiple ones as a veteran credit card hacker, there are nice perks that everyone can benefit from.
Just remember, this tip has two very important caveats:
- Use credit card for things you are already planning to spend on (so no unnecessary shopping sprees).
- ALWAYS pay the balance IN FULL and ON-TIME (yes, I am being a broken record).
Don't be afraid to ask
You might be able to get a discount on something if you just ask for it. Or, if you make mistakes and get charged fees by your bank or credit card, you can try to ask for a courtesy waiver of the fee.
The worst that can happen is you're told no. But sometimes you can save a pretty penny. Try to save that pretty penny.
Diversify your income
Don't put all your eggs in a basket. If you have a job, get a side hustle for extra income.
Put your money in different accounts, like in your bank account, retirement, and stocks/mutual funds, etc.
Don't focus on gifts, focus on experiences
Don't make it a habit to get gifts for every special occasion.
Rather, most people enjoy spending time together, so focus on creating memorable experiences instead. Like these budget-friendly yet fun family Christmas traditions that will leave a lasting impression.
Don't skimp on things that matter
Some things are okay to get cheaper, but some things you shouldn't cut costs at the expense of quality. This includes gifts for other people as well as things that affect the health and safety of your family.
I do like 99% of my shopping over here*, where I can read extensive product reviews to make sure I'm buying quality stuff.
I love the membership benefits* that give me more bang for my buck and actually save me some money.
Give what you canYou're always in a better position than someone else, so when you can afford it, donate a portion of your money to a charitable organization or someone in need. What you'll reap from that is beyond anything that money can buy.
Final thoughtsThere are of course lots of other great tips to follow, but this is a summary of the best financial advice I've gotten from my parents. Incorporate them into your life and it should serve you as well as it has served me.
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