What is the best financial advice you would give someone?

Question

This could be any info or advice that you think is important as far as investments, credit, saving money, etc.

Answer 1

I'll try to keep a complex answer as simple as possible but this would be the basic recommendation that would hold true for anyone, at any age.

1. Learn to live on a cash only basis for at least 2 years before considering ANY type of credit. This includes creating and living within a budget, and learning to prioritize your spending.

2. Within that time, learn to put away savings. At least $50 a month should go into an account for emergencies (like when your car breaks). If you have a family, you need a bigger emergency account. Ideally it should have about 2-3 mos of your living expenses in it or more (you can keep this in a money market or CD account to keep it available but get a higher interest rate on it).

3. Also you should work as quickly as possible towards putting away the maximum you can towards your retirement. The vast majority of Americans are completely in the dark as to how much money they will need to retire and many, many will end up living in poverty and/or unable to ever retire. Starting this savings as early as possible is a big advantage.

This means funding a Roth or Traditional IRA account to the maximum each year (for your spouse to if you have one) AND contributing at least up to the maximum match your employer offers in your plan at work. Better to max this too.

4. When you are ready to acquire credit, learn to manage it too and to use debt as little as possible, and only to buy things that are truly important and otherwise tough to get, like a house. You can finance a car, but you will be a lot more secure financially if your car is NOT a major part of your monthly expenses. It is possible to buy a car with cash, you just aren't likely to have as nice a ride. At least not in your early years. However patience at that point carries big rewards. Let your friends have an $800 mo payment, you'd rather be rich.

5. Don't forget that insurance is important too. Yeah, if you're single and haven't got kids, your need isn't that critical but there are advantages to buying at least some permanent (otherwise known as whole life or universal life) while you are still young. First of all, it will be a lot cheaper, and secondly, as you age odds are your health will grow to be less than perfect. People with imperfect health pay higher rates or could even end up uninsurable, so buying young protects your insurance rates.

A permanent policy that you've had long enough to build up a fat cash value also offers an extra safety net for money, and can even become a tax-free source of money at retirement age or for your kids' educational costs.

6. Cover higher insurance needs with term. Term doesn't build a cash value but is meant for temporary needs, such as the period of time you are responsible for your kids. For these reasons, it costs a lot less so you can really buy as much as you need.

7. If your employer offers disability income insurance, jump on it. It's cheap that way (and expensive if you buy on your own) and if you ever can't work for an extended period (and most people will have a period in their life when this is true), it will cover the lion's share of your missing income. I can't emphasize enough how huge this protection can be.

8. Likewise review your auto, homeowner's or renter's coverage periodically to insure they are meeting your needs.

9. Once you have the basic habits in place, you can begin to put away more money to invest for wealth accumulation. Sit down with a good financial planner and have them help you define your personal goals and build the plan to make them happen.

Answer 2

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Answer 3

The most important advice that I can give you is to start saving as early as possible so that your money can grow

Stay away from stockbrokers until you have a substantial amount of money to invest. They are paid totally on commission

Read the latest edition of "The Only Investment Guide You Will Ever Need" by Andrew Tobias

Answer 4

Philisophically speaking:
You'll never get what you want until you want what you get. In other words, learn to enjoy the things you have now, instead of getting into the trap of always wanting more/better things. Of course, buy yourself enough so as not to look like a beggar, but remember that the more people get, the more they usually want.

Practically speaking:
Treat saving money as a fun way to build stability and security in your life, not as a way to "get rich". Instead of saying "I'll only feel happy when I can afford a Lincoln Navigator and a huge house", say "What a dope! I paid half as much money as that guy for my house and my car, and all he gets to do now is pay more for gas and spend twice the time dusting! Meanwhile I can retire a few years earlier than he can!"

(and finally) Short and sweet: ALWAYS participate in any MATCHED 401k/retirement plan offered by your employer, even if you just give up to the amount matched and no more.

Answer 5

In my experience financial "advisers" that offer free sit down advice, will most certainly follow that up by a not so soft sales pitch. I personally prefer to educate myself, including talking with others who know finances. I don't think there is anything wrong with using a financial advisor and his/her services, but seek out someone reputable, rather than getting yourself stuck with a hard sell that may not be in your best interests. My primary financial advice: Pay yourself first. Monthly automated deposits ensure this and also force you to dollar cost average. Where you invest or save your money can make a difference, but the first and foremost important thing is that you save or invest it somehow. ~

Answer 6

Five things:

1). stay away from credit (only use credit to buy a home)

2). always have money set aside for emergencies

3). save early, save often - while time is on your side

4). always pay with cash or check card (debit/credit card)

5). have a budget and follow it

Re: Lori's answer - NEVER buy anything but term life insurance. Life insurance is only necessary if you aren't self-insured. As long as you keep saving, one day, you will have more in savings (stocks, retirement, etc.) than your life insurance policy will pay. At that point, you are self-insured and don't need that policy. With whole-life and universal life, the insurance company gets rich off your high premiums and gives you a pittance as 'interest'.

Answer 7

There isn't a 40 year old on the planet who doesn't wish they started maxing out all retirement accounts at 18.....

Never carry a credit card balance - EVER - did I say "EVER?"

Don't just save 10% of your paycheck - save all you can in addition to retirement funds to get your emergency fund built as fast as possible....

No disposable income (play money) until you have a CD ladder in place. 3mo/6mo/9mo - get used to locking up your money now.....you'll be millions ahead of the rest of us.

Answer 8

Speak to a stockbroker investments banker and 2nd opinion a cpa

Answer 9

save 10 percent or more of all money you make or receive!