Ten money rules to live a richer life: These are my ideas for making the most of your finances, what are yours? asks SIMON LAMBERT
Building up an understanding of personal finance is one of the best ways to 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.
Back to school: Financial edcuation is an essential for getting ahead but what would you teach people about money?
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.
At This is Money, we try to play our part in educating people: explaining what the financial news means for them, what they can do to get ahead, and publishing guides to your finances. We also have our weekly This is Money podcast, where we dive deeper into financial topics.
This is an area that we are going to be doubling down on in the months ahead, with new and updated guides, so I’d love to hear your thoughts on what you’d like to see covered – and any ideas on ways you’d like to see us do it.
But it’s not all about the in-depth guides, sometimes the best lessons are short and to the point, allowing you to expand on them as you choose.
This is far from a definitive list, but 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?