Five Timeless Sayings for Financial Success

Five Timeless Sayings for Financial Success

When it comes to personal finance, some “typical” savings are true regardless of who says them. In this post, we will examine five of these sayings and delve into them a little to see how we can make them work in our busy lives. I know I have heard these from many different places from articles, blogs, personal finance books and, of course, from my mom. So without any further ado let us get right into these five important sayings that we all need to follow.

The first is perhaps one of the best known and most important of the five and that is be sure to always pay yourself first from all sources of income. Now most of us do enjoy the feeling of getting paid on a regular basis be that monthly or every two weeks. But let us not limit paying ourselves from a regular paycheck, go beyond that and make sure you also pay yourself from side gigs, income tax refunds, and cash gifts. So what does this actually mean? It means that every time you receive money to make sure you set aside a portion of that to a savings account or an investment account. If you are dealing with a paycheck, set these payments up so that they are automatic and transfer from the account in which you are paid to a separate account that ideally is difficult for you to access. In the case of extra funds determine a portion that you will set aside at the start of the year and do not deviate from that percentage as you get these extra funds and make sure the money goes to the special separate accounts as well.

The second saying

The second saying is almost as important as the first, but it is live below your means. How is the world do you do this you may ask? Well, I recommend first you develop a working budget so that you will know what funds are coming in and where those funds are going when they leave. Without a proper budget, it is almost impossible to know if you are indeed meeting the intent of this saying. Without a budget, you will not be sure if you are living below your means and that simply means you end up saving more money per period that you spend. If you develop a budget and see that you are spending more than you are making it is time to take a hard look at your expenses to see what can be cut. It may also mean that you need to find an additional source of income to meet your expenses if you can cut your expenses and are still in the red. If you are serious about budgets, please make sure you do one that you are comfortable with and one that you will be able to follow. If you would like to know more about budgets, please read my book Budgeting 101, and you can get it at https://amzn.to/2SWwTxG.

The third sayings

The third sayings is, always prepare and save for the unexpected. This is a natural step if you are paying yourself first and have prepared a proper budget to make sure you can meet your obligations the next step is to always prepare for what you do not expect to happen. This could mean a new roof if you are a homeowner or a new transmission if you own a car. These are expenses that always seem to occur, and to a degree we expect them to occur, but it seems that most of the time they are an emergency when something happens. If you are preparing a budget and living below your means, the third step is to always set some funds aside for an emergency or at least in an account for routine maintenance for homes and cars. And here I am not talking an oil change for your car but rather than $1,000 plus repair to keep your car functioning. And unless you are budgeting it is almost impossible to prepare for the unexpected and the ever important emergency fund you should also establish. Start small with an emergency fund of one month’s salary and expand it to six or more ideally because you never know when you could lose a job or have a major expense come up.

The fourth saying

The fourth saying is directly tied to the third, and that makes your money work for you. If you are like so many you most likely have a credit card and if you do take a minute to think about how you pay on the balance if you carry a balance on that card, which I hope you do not do. But if you do notice how you make payments on that card and it seems the balance never really goes down that much. That is the reverse of this saying as your money is working hard for the credit card company. But the same applies to you and your savings so stay with me here as we look at this a bit closer. If you are dealing with your emergency fund or a short term goal such as new tires you will want the funds in a safe, secure account that you can access with little difficulty. These funds are not meant to really work for you are they are intended to be there in the event you need them. But say you are saving for the down payment of a house, a child’s college or your retirement you do want these funds to work for you. These funds you want to earn a modest to good return, so your money is growing and making more money for you instead of sitting idle — the stock market where you can invest in a diversified low-cost index fund to maximize your earnings potential. The key here is to make sure you are indeed diversified across several different asset classes as to not expose your hard earned money to the whims of one or two shifts in the markets or economy. Then sit back and watch those funds grow over time in your favor and let your money begin the process of working for you.

The fifth saying

And finally, you are your best investment. What this means is you will be the best at making yourself better and putting yourself in the best position to earn a living and make the first four sayings a reality. If that means moving to where employment opportunities are better, consider making a move. If you will get a promotion or a significant raise consider going back to school to get the proper education to achieve this goal. And just for the record, a proper education does not always mean a fancy college degree as many jobs require technical expertise that you can get at many lower-cost community colleges or technical schools. But always invest in yourself to make the most of your opportunities but also make sure you always weigh the pros and cons before incurring more expenses to ensure the change will benefit your financial situation.

When I was an Intern with the FDIC, I went to a conference and watched a speaker present his material on personal finance. Now I do not recall what the presenters’ name was but he told us that he worked with Southwest Airline’s Herb Kelleher made sure to provided a simple book to all his employees so that they would have at least a basic understanding of how to get ahead in this world. And being a young know it all college senior I did take note and bought the book he recommended, and it was ten rules to follow for financial prosperity and the five we just discussed were included in that book. I can honestly recommend the book to all of you, The Richest Man in Babylon which you can get at https://amzn.to/2VJrU5w.

If you have any questions or comments, feel free to leave them here or contact me directly.

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