Financial Advice from an ‘Average Joe’

Every day there are expert advice on how to save, plan for retirement, or how to make a quick buck.  I’d be the first one to admit that I’m no expert in finance, but it surprises me how wisdom is often a little more than being able to apply simple concepts of common sense.  Therefore, I offer my personal set of rules and applications for being financially stable.  Nothing ground breaking here, but these are just principals that would be beneficial for people to live by.

Okay, so the first three items on my list are all listed together.

1) Live within your means, 2) Know the difference between wants and needs, and know how to appreciate 3) Delayed Gratification

If I’ve said it once, I’ve said it a thousand times: Live within your means!  This of course takes people knowing the difference between wants and needs,  plus lends people to realize how to appreciate delayed gratification.  People tend to have short memories when it comes to being able to classify what constitutes a want or a need.  Remember say 10 to 15 years ago when almost no one had cell phones.  At best there was one per household and that was used to *gasp*… make phone calls!  Now, not only does everyone need a cell phone, they also ‘need’ unlimited texting, full internet browsing, unlimited calls, and the like.  The things we take for granted, like cell phones, a relatively new car, cable television, eating out at restaurants, those are all ‘wants’ PEOPLE!  I’m all for people spending money however you please, just don’t take my hard earned money (aka welfare, food stamps) to support your overindulgence. 

4) Analyze your budget regularly

It surprises me how so many people honestly don’t know how much cash they actually burn through in a given month.  In the business world it’s called cash flow, and essentially you have to manage how much is coming in and how much is going out.  With the explosion of online banking the past few years, its ever the more convenient to manage the amount you spend, where you spend it, when you spend it, and how you spend it.  No longer are we required to walk around with paper check books in order to document and calculate every expense.  One would think this added convenience would result in the increased usage of budget constraint due to the real-time nature of knowing how much cash is available.  If budgets were analyzed regularly, then people should be able to know within a reasonable amount, how much money they have left to spend.

5) Credit cards should not be a part of your regular budget activity

If by the end of each month, you’re having to pull out the credit card to finish up those last few bills, then you really should do a thorough analysis of exactly how you’re money is being spent.  Of course there are those who are cash strapped who rely on credit as a last resource, but with so many people living beyond their means, it’s simply not financially responsible to lose grasp of how much of a hole you’re digging yourself in to.  We all same the same line, … oh I pay off my credit card each month and use the transactions to get some ‘credit bonus program’ or to boost my credit rating.  That’s a really slippery slope that many find themselves in and before you know it, you’re thousands of dollars in debt.  In short, beware of the credit cards.

6) Plan ahead

Want to purchase some nice gifts for the holidays?  Are you ready to buy that new car?  Well that’s great, as long as you plan ahead for your purchase.  There are going to be impulse buys within all budgets, but it is critical that major purchases be planned out ahead of time.  This ensures you actually have the money to spend, that you’ve researched the best price available, and that you have considered how the purchase will affect the rest of your budget. 

I’m sure you’ve begun to think of these money-saving tips as some penny-pinching, never-have-fun, save-every-dollar budget strategy for the puritan idealist who save up a lump sum for retirement while giving up every enjoyment in life.  In no way am I saying all these tips should be ruled with an iron fist where no discretionary income is every used to splurge a little.  On the contrary, living with these tips in mind actually gives you more freedom to live without the burden of ruining your financial future.  Yes, you may miss out on a few fad gadgets every once and a while, but by no means are you compromising your financial liberty.  Just equip yourself to have a bit of perspective when it comes to your money, and you’ll be all the wiser.

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