Building up an understanding of personal finance is one of the best ways to save money and get richer in life.
In the absence of a Premium Bonds or lottery win, or starting your own hyper-successful business, it’s unlikely that a life-changing windfall will come most of our ways.
And so, we must work to earn a crust, whether for an employer or ourselves, and do the best we can with our finances to get richer slowly.
Getting a grasp on those finances is even more important at a time when inflation is rampant, recession warnings are being sounded, and some of the less well-off are suffering a genuine cost of living crisis.
You don’t need to be a financial expert, but knowing the basics of saving, borrowing, investing, and managing your money will pay off.
After all, consider what you are up against.
There are lots of clever people out there, using every tool they have at their disposal to try to take your money off you.
And I’m not talking about fraudsters here, but the legitimate businesses who want to convince you that their special shopping day discount, supposedly better service, or three-for-two offer will benefit you, when it’s been created to advance their interests not yours.
Banks, credit card companies, investment managers, supermarkets, estate agents, online retail giants, even small shops are all at it – and so they should be, that’s their job.
Your job on the other hand is to keep your wits about you, understand the basics and fill in the gaps when you come across them.
What would definitely help would be teaching personal finance properly in schools. Some have a good crack at it, but personal finance education and financial literacy is patchy at best.
10 Money Rules
Here are my simple but important money rules for life:
1. Learn to budget and save a rainy day fund.
2. Learn to love compound interest and returns – start small, save early, and save regularly.
3. Invest over the long-term – and learn to love compounding even more.
4. Buy things that last and are worth the price.
5. Before you buy or invest, ask why is this person trying to sell this to me?
6. Save and invest but enjoy the money that you can afford to spare.
7. Borrow carefully and wisely – and pay it off.
8. Be generous when you can afford it.
9. Your power to earn is the thing most likely to make you richer.
10. Don’t be afraid to take some risks, but do be prepared for things not going to plan
That’s my list, what would you teach people about money? Share your thoughts with others in the reader comments below.
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