There are certain things we all wish we knew about money, things that would have led to better decisions. As we continuously age, we realize there’s so much more to finances than savings. In efforts to do things differently, we’ve gathered financial nuggets we wish we knew from a popular online forum.
1. Don’t Buy the Hype
Too many people make financial decisions because others do it. They will buy stocks because they are the hottest trend in the market or start a business as they see others thriving. A member of a financial forum says, “Take time to understand anything and everything you want to buy into. Then do your due diligence.” Don’t rush to join in; it’s not a competition. Stand your ground and weigh all possible options.
2. Put Away as Much as Possible
Don’t start thinking about savings in your late thirties or forties. There’s no cap to it. When you start saving late, you’re under constant pressure to put away as much as possible quickly. Start keeping a little bit of money from as early as you can. If I had saved for my dream house in my early twenties, I’d own it by now. I have a few miles to go, but the earlier you start, the better!
3. Learn Risk Management
Risk is a part of everything we do, and finances are no exception. Take time to evaluate your options and know what you are up against. An online user says, “If you’re considering an investment, look at it from a wider angle. Are you prepared to lose money? Because it could happen!” Always have a plan in place if you have financial challenges.
4. Consider Index Funds
You need a revenue stream that will bring home the bacon without putting too much effort into it. Index funds have the opportunity to bring you tremendous financial success. Buy shares in an index pool and wait. This pool of money will purchase portfolio assets and could give everyone who puts into it profits. These are returns over a long period. However, it’s best to consult a financial advisor before buying shares.
5. Always Have a Hedge
“Never bet one side,” says a financial expert. It’s always best to dabble in a few things to maximize your earning potential. If you rely on one source of income, what happens if it sinks? Say you’re fully employed, have a small business on the side, invest your money in a credit union, or consider other sources. As the famous saying goes, don’t put all your eggs in one basket.
6. Take Calculated Risks
An online finance expert says, “Don’t be about the ‘you live only once’ mentality, but trust your gut and your knowledge.” If a financial opportunity seems too good to pass by, consider it cautiously. But if you have any reservations, do your due diligence. Some risks could be worth taking because the outcome will be beneficial if they pan out.
7. Keep a Personal Budget for Your Expenses
Many of us take this one for granted! But there’s nothing better than having a bird’s eye view of your finances. A budget will help you see how much you make and what goes out. It allows you to be mindful of how you spend your money. You’ll quickly identify problem areas, like overspending and extravagance, then work on them.
8. Don’t Get Greedy
Someone has to say it! Don’t be so intoxicated with getting it all that you lose sight of your bigger picture. If you don’t stop for a moment and work for what you want, then enjoy the profits because you want more, you’ll lose more in the long run. Learn to be content with a little so a lot can accrue.
9. Pay Attention To Value
Users on an online issuing forum agree that we pay attention to value when it’s a little too late. In other words, are you getting what you’re paying for? Are the things you’re purchasing worthwhile? These should be amongst the first factors to consider. How will your assets benefit you in the long run? It’s not so much the dollar amount as it is what you will get from it.
10. Aim To Own Than Rent
Constantly churning money to cover your rent can be a painful experience, mainly because the months go by so fast. As soon as you open your eyes, another payment is required! Owning your home is a significant investment that should be an end goal, no matter how long it takes. The house will appreciate in due time and can be worth much more than its asking price.
11. Diversify Your Portfolio
A diversified portfolio improves your potential earnings. When making investment decisions, don’t only think about stocks vs. bonds, index funds, and periodic rebalancing; there’s much more to it than that. Sprucing up your portfolio means spreading your wealth and understanding what works. If you’re not getting returns, know when to get out.
12. Make Mistakes and Learn From Them
This list wouldn’t be complete without this essential financial nugget. It’s perfectly okay if it takes you a little longer to learn or even know how things like savings work. Numerous people online state that they understand money better with time. Don’t beat yourself up when you fail. Instead, learn from it and make better choices going forward.
This article was initially published and syndicated by The Cents of Money.