There are many financial lessons to learn and you likely were not taught them in school. For many of us our parents did not teach us them because they were not taught them, nor were your grandparents or their parents before them. Fortunately there are some people that have actually figured out the game of money and thankfully they have shared their knowledge. In this post we have consolidated a selection of 5 of the best pieces of financial advice from the experts to help you work towards a better financial future.
Ramit Sethi: Don’t Just Reduce Your Expenses, Increase Your Income
Ramit Sethi, author of I Will Teach You To Be Rich, feels that the conversation around finances often overlooks making more money in favour of finding ways to reduce expenses. For Ramit earning a pay rise is a far better start to getting your finances in order than cutting back on lattes and he spends a lot of time detailing strategies to gain pay rises and promotions to increase your income. From outlining goals with your boss and researching salaries for your role to finally securing that pay rise, Ramit outlines it all across various interviews and his books. You can find out all the details of his approach on his website (www.iwillteachyoutoberich.com) and in his book, I Will Teach You To Be Rich. Specifics aside, we wanted to start off this post by highlighting the commonly overlooked part of the personal finance equation – your income.
Mark Cuban: Clear Your Debt
Billionaire owner of the Dallas Mavericks and Shark Tank investor Mark Cuban has shared many words of wisdom on finance over the years from sharing his views on using credit cards to offering his advice on investing but the point we wanted to focus on was clearing debt. Clearing your debt should be a priority. This is a crucial piece of advice and a sentiment shared by many financial experts and successful business people alike. Trying to save whilst you have high interest loans to pay off is like swimming against the current. Whilst it may mean living more frugally in the short term paying off debt sooner rather than later can help you massively in the long term. Look to renegotiate repayment terms as you will find that even increasing monthly repayments slightly can reduce the repayment time on a loan by years.
Kevin O’Leary: Avoid Unnecessary Fees (And Don’t Over Pay)
Getting out of debt is one thing but staying out of it is another and Cuban’s fellow Shark Tank investor Kevin O’Leary has a few thoughts on that matter. O’Leary preaches the old adage of buying less Starbucks and making your coffee at home instead. He is a big proponent of not overpaying in general and specifically champions avoiding unnecessary fees. O’Leary believes through negotiation and some financial literacy you can reduce costs, avoid fees and ultimately save money. O’Leary says he carries a total of 8 credit cards across different currencies this way he avoids paying fees back in the USA for spending in the UK for example. Whilst we aren’t all off jet setting across the globe for business the principle of avoiding fees is a good one to follow.
If you have ever taken out a loan with a bank you’ll know they will charge a fee and although you probably cannot erase the fee entirely they are probably willing to negotiate lower fees. The bank makes most of their money through the interest on the loan so they will likely meet you half way where fees are concerned if it secures them the loan and the lucrative interest that comes along with it. Similarly everyday expenses such as your broadband and phone bills can be renegotiated and if it comes down to charging you less or you leaving for a competitor you’ll be surprised how quickly companies can drop their “best price” even lower.
Warren Buffett: Make Saving A Priority
If you are actually going to save money you need to make it a priority, something billionaire investor Warren Buffett understands well. It is easy to say you will start saving “next month”. It is even easier to make excuses if saving comes after your expenses and you are left with the choice to save the little money you have left (which doesn’t seem worth it) or buying something you want and saving later. By prioritising saving and automating it through direct debits to savings accounts etc. you are much more likely to reach your saving goals. As Buffett puts it, “Don’t save what is left after spending; spend what is left after saving”.
Danielle Town: Don’t Let Saving Cost You Money
Don’t just save, invest. How to invest is a subject all to itself but the fact that should be investing is something, host of the personal finance podcast InvestED, Danielle Town believes in strongly. Danielle Town is vocal about the fact that saving can actually “cost” you money, a detail many often fail to address. It sounds crazy but she makes a very valid point. £20 saved now is still £20 in 5 years but due to inflation that £20 is worth less than when you saved it in terms of what you can actually buy with it. Just as smart investing can see your money grow with the best results seen over time, inflation will eat away at the value of your savings. Put your money to work by investing it, don’t just horde savings and let inflation diminish the value of your hard earned cash.
Often we learn financial lessons the hard way, if at all. Often people are just left living paycheque to paycheque without even seeing the mistakes they are making and the changes that could drastically change their financial prospects. By starting with these five expert tips you can start to make changes to your financial habits which can have drastic long term results.