We all want to be in charge of our financial futures - not having to report to bosses, spend the next couple decades or more doing things we don't enjoy, being able to enjoy life a little more than we currently do.
We may hope that, eventually, "our time will come", but if we don't make wise decisions now then we're leaving the fate of our families financial futures on a scratch-off ticket.
There are certain things that we can address about our personal perspectives, boldness and courage that can be the building blocks to future financial security and freedom.
Did I miss something? Please add your thoughts in the comments below.
1. Don't compare yourself to others
Social media has made it way too easy for us to compare ourselves to others. We see our friends going on expensive vacations, buying nicer cars than ours and wearing nice clothes.
But the truth is that, as humans, we struggled with this way before social media. How we compare to others gives us our sense of wealth or success. Unfortunately, that will never provide happiness or contentment as there will always be someone with more money and material things than us.
Instead, we should compare ourselves with ... ourselves. Set goals, track your progress and review your results. Make it a goal to improve - whether that be by paying off debts, putting more money into your savings account than the same month last year, or something else.
2. Don't be penny wise and pound foolish
Spend a little more money now if it means saving more money later. An example of this could be investing in solar panels for your home. It'll cost some money now, but with the rising inflation rates it's sure to save you a lot more money later when monthly electric bills are twice or 3x as high as they are now.
A few other ideas might include:
- Insulating your home
- Buying a slightly-newer car
- Paying for subscriptions annually instead of monthly
3. Don't buy a bigger house than you need
Now is certainly a polarizing time for buying a house in general, with the continually rising interest rates and home prices still being very high but, if you are looking to buy a home and are given a couple of options, consider choosing a slightly-smaller house than what you think you need.
Why? Because people spend the vast majority of their time in the kitchen, bedrooms and family rooms. That extra room that would be nice to have? It might cost you an extra $50k and $100+ per year in property taxes.
4. Negotiate your salary
Negotiating isn't only for managers and executives. Everyone can and should negotiate their salary when they start a new job, or even in their current positions.
70% of managers expect negotiation, that's why they don't offer you what they can actually pay you in their initial job offer. Ask for a couple extra percentage points, or $0.50+ more per hour depending on your situation.
5. Don't try to beat the market
Hedge funds managing billions of dollars control the markets, and it's nearly impossible for them to lose. Us individual investors with hundreds or thousands of dollars cannot beat them without an insane amount of luck.
Day-trading can be alluring, but the vast majority of day-traders lose 100% of their investment in a matter of days or weeks. It's often more wise and lucrative to invest your money in companies you believe in for the long haul.
6. Consider starting a business
This can be a pretty involved idea, but one worth considering for its possible financial upside and freedom. When you're an employee, you're working hard for someone else's wealth. When you're a business owner, you're working hard for yours.
7. Don't loan money to friends
You may want to help a friend in need. It may be coming from a good place, but it often leads to awkwardness and hurt (or broken) relationships.
If you do even loan money to family members or friends, prepare yourself to be okay if you never get paid back.
8. Focus on increasing your income
Sure, there may be opportunity for you to decrease your standard-of-living, but you shouldn't neglect opportunities to increase your income.
There are many ways that you can do this:
- Negotiate your salary (as mentioned above)
- Switch jobs
- Start a side hustle
- Take a second job
9. Buy used cars
Most new cars lose up to 60% of their value 5 years after purchase. Millionaires buy used cars because:
- They're cheaper
- They've already depreciated in value
- They can then invest the saved money
10. Don't buy on emotion
I don't often like to go shopping - or go to one place more than once before making a purchase. Because of this, I sometimes buy something based on emotion - what I want or feel in that moment. But this often leads to poor decisions, or at least spending more for something than necessary.
Make sure to have a plan prepared before you buy something.
What about you?
Do you have any tips for those who want to improve their personal finances? Share them in the comments below!