If you'd like to learn more about how to grow your net worth, you can subscribe to Free Money Finance's RSS feed for free by clicking this link.
I've been pondering (Yes, I used "pondering". I am, after all, getting older) what the 10 best money moves are, so I thought I'd take a stab at listing what I think are the top ten, then have everyone comment on them and adjust as needed. Note that these aren't listed in sequential order (which you would do first, second, etc.), but rather listed in order of importance (which has the biggest impact on your net worth).
Before we begin, I'd like to start with some perspective. There are plenty of things worth more than money (like your health, time, your mind, and your kids). So while this is an important list, there are things in life much more important. (Just adding some perspective there.) :-)
Now, here's my top money moves list:
1. Spend less than you earn. This alone is THE key to getting rich. Said another way, save a portion of all you make (To spend less than you earn, you may need to earn more or spend less.) By the way, doing this is the way to become the richest man in Babylon. ;-)
The keys to spending less than you earn are to create and review a financial plan including establishing a spending plan. There are three ways to track your spending. I prefer to use Quicken or Microsoft Money -- or a great budgeting alternative.
2. Increase your income. The best way to do this is to make the most of your career -- your most valuable financial asset -- which will offer you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime. Then, look for additional ways to increase your income (and who knows, you might find a new business somewhere in here.)
3. Contribute to your 401k to get the full employer match. It's a no-brainer investment where you earn 50-100% return automatically (depending on your employer's plan/match). Where else can you get such a great return? (By the way, not doing this is one of the nastiest money habits I can think of.)
4. Get out of credit card debt. It's a great way to earn a 20% return on your money -- and relatively easy to do if you've done steps 1-3 already and have a bit of discipline.
5. Buy a house. Generally, homeowners get rich and renters stay poor -- and buying a house can make a big (positive) difference in your net worth. The key to making the most of this step financially is to follow a proven, successful formula for buying a house. Doing so will even protect you financially from the real estate cool down we're experiencing in the U.S. Better yet, once you buy a home, take some simple steps to increase its value.
6. Invest your savings regularly in good, solid investments. I like index funds. Do this for a long time, letting the power of time and compounding work for you. Simply doing this can make you rich. According to Smart Money magazine, simply putting money away into savings and then investing that money will net you over $1 million in 10 years (I think that's a bit high, but even if it's a quarter of that amount, it's a big number!)
7. Pay off all debt. You won't get as good a return on this debt as you will on your credit card debt, but you will get a guaranteed return (paying off a 9% loan is the same as earning a guaranteed 9% -- after taxes -- on an investment). Not bad. If you're diligent and have done enough of the preceding steps, you can pay off much of your debt in a year or less.
8. Save for retirement -- above and beyond the employer match to your 401k. I recommend the following saving steps: 1) save to get the full employer 401k match, 2) invest in a Roth IRA, then 3) max out your 401k. If you do this early and often, you can retire wealthy.
9. Protect what you have. This means obtaining adequate insurance and developing an estate plan (including writing a good will that works for you and names a guardian for your children).
10. Give. I know this might seem like a strange item to put on this list, but there's a power in giving that unlocks financial blessing in your life. And it's not that "wealthy people tend to give" but it's often that "giving people become wealthy." Easiest way to give? Put it into your budget just like any other "expense."
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Tuesday, 6 November 2007
The 10 Best Money Moves You Can Make
If you'd like to learn more about how to grow your net worth, you can subscribe to Free Money Finance's RSS feed for free by clicking this link.
I've been pondering (Yes, I used "pondering". I am, after all, getting older) what the 10 best money moves are, so I thought I'd take a stab at listing what I think are the top ten, then have everyone comment on them and adjust as needed. Note that these aren't listed in sequential order (which you would do first, second, etc.), but rather listed in order of importance (which has the biggest impact on your net worth).
Before we begin, I'd like to start with some perspective. There are plenty of things worth more than money (like your health, time, your mind, and your kids). So while this is an important list, there are things in life much more important. (Just adding some perspective there.) :-)
Now, here's my top money moves list:
1. Spend less than you earn. This alone is THE key to getting rich. Said another way, save a portion of all you make (To spend less than you earn, you may need to earn more or spend less.) By the way, doing this is the way to become the richest man in Babylon. ;-)
The keys to spending less than you earn are to create and review a financial plan including establishing a spending plan. There are three ways to track your spending. I prefer to use Quicken or Microsoft Money -- or a great budgeting alternative.
2. Increase your income. The best way to do this is to make the most of your career -- your most valuable financial asset -- which will offer you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime. Then, look for additional ways to increase your income (and who knows, you might find a new business somewhere in here.)
3. Contribute to your 401k to get the full employer match. It's a no-brainer investment where you earn 50-100% return automatically (depending on your employer's plan/match). Where else can you get such a great return? (By the way, not doing this is one of the nastiest money habits I can think of.)
4. Get out of credit card debt. It's a great way to earn a 20% return on your money -- and relatively easy to do if you've done steps 1-3 already and have a bit of discipline.
5. Buy a house. Generally, homeowners get rich and renters stay poor -- and buying a house can make a big (positive) difference in your net worth. The key to making the most of this step financially is to follow a proven, successful formula for buying a house. Doing so will even protect you financially from the real estate cool down we're experiencing in the U.S. Better yet, once you buy a home, take some simple steps to increase its value.
6. Invest your savings regularly in good, solid investments. I like index funds. Do this for a long time, letting the power of time and compounding work for you. Simply doing this can make you rich. According to Smart Money magazine, simply putting money away into savings and then investing that money will net you over $1 million in 10 years (I think that's a bit high, but even if it's a quarter of that amount, it's a big number!)
7. Pay off all debt. You won't get as good a return on this debt as you will on your credit card debt, but you will get a guaranteed return (paying off a 9% loan is the same as earning a guaranteed 9% -- after taxes -- on an investment). Not bad. If you're diligent and have done enough of the preceding steps, you can pay off much of your debt in a year or less.
8. Save for retirement -- above and beyond the employer match to your 401k. I recommend the following saving steps: 1) save to get the full employer 401k match, 2) invest in a Roth IRA, then 3) max out your 401k. If you do this early and often, you can retire wealthy.
9. Protect what you have. This means obtaining adequate insurance and developing an estate plan (including writing a good will that works for you and names a guardian for your children).
10. Give. I know this might seem like a strange item to put on this list, but there's a power in giving that unlocks financial blessing in your life. And it's not that "wealthy people tend to give" but it's often that "giving people become wealthy." Easiest way to give? Put it into your budget just like any other "expense."
I've been pondering (Yes, I used "pondering". I am, after all, getting older) what the 10 best money moves are, so I thought I'd take a stab at listing what I think are the top ten, then have everyone comment on them and adjust as needed. Note that these aren't listed in sequential order (which you would do first, second, etc.), but rather listed in order of importance (which has the biggest impact on your net worth).
Before we begin, I'd like to start with some perspective. There are plenty of things worth more than money (like your health, time, your mind, and your kids). So while this is an important list, there are things in life much more important. (Just adding some perspective there.) :-)
Now, here's my top money moves list:
1. Spend less than you earn. This alone is THE key to getting rich. Said another way, save a portion of all you make (To spend less than you earn, you may need to earn more or spend less.) By the way, doing this is the way to become the richest man in Babylon. ;-)
The keys to spending less than you earn are to create and review a financial plan including establishing a spending plan. There are three ways to track your spending. I prefer to use Quicken or Microsoft Money -- or a great budgeting alternative.
2. Increase your income. The best way to do this is to make the most of your career -- your most valuable financial asset -- which will offer you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime. Then, look for additional ways to increase your income (and who knows, you might find a new business somewhere in here.)
3. Contribute to your 401k to get the full employer match. It's a no-brainer investment where you earn 50-100% return automatically (depending on your employer's plan/match). Where else can you get such a great return? (By the way, not doing this is one of the nastiest money habits I can think of.)
4. Get out of credit card debt. It's a great way to earn a 20% return on your money -- and relatively easy to do if you've done steps 1-3 already and have a bit of discipline.
5. Buy a house. Generally, homeowners get rich and renters stay poor -- and buying a house can make a big (positive) difference in your net worth. The key to making the most of this step financially is to follow a proven, successful formula for buying a house. Doing so will even protect you financially from the real estate cool down we're experiencing in the U.S. Better yet, once you buy a home, take some simple steps to increase its value.
6. Invest your savings regularly in good, solid investments. I like index funds. Do this for a long time, letting the power of time and compounding work for you. Simply doing this can make you rich. According to Smart Money magazine, simply putting money away into savings and then investing that money will net you over $1 million in 10 years (I think that's a bit high, but even if it's a quarter of that amount, it's a big number!)
7. Pay off all debt. You won't get as good a return on this debt as you will on your credit card debt, but you will get a guaranteed return (paying off a 9% loan is the same as earning a guaranteed 9% -- after taxes -- on an investment). Not bad. If you're diligent and have done enough of the preceding steps, you can pay off much of your debt in a year or less.
8. Save for retirement -- above and beyond the employer match to your 401k. I recommend the following saving steps: 1) save to get the full employer 401k match, 2) invest in a Roth IRA, then 3) max out your 401k. If you do this early and often, you can retire wealthy.
9. Protect what you have. This means obtaining adequate insurance and developing an estate plan (including writing a good will that works for you and names a guardian for your children).
10. Give. I know this might seem like a strange item to put on this list, but there's a power in giving that unlocks financial blessing in your life. And it's not that "wealthy people tend to give" but it's often that "giving people become wealthy." Easiest way to give? Put it into your budget just like any other "expense."
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