You’ve probably heard it many, many times: if you want to be wealthy, always spend less than you earn and invest wisely. It’s true. However, there’s more to a rich life than following those two concepts.
In an article by Jeffrey Strain on TheStreet.com, he offers 10 financial lessons for a richer life. They are so important, we wanted to share them with you. We took what we consider to be the top 5 lessons and laid them out in no particular order because they are all very powerful.
When you have some quiet time, read them carefully. They will either strike a chord or they won’t. Just know one thing, the more chords they strike, the better.
- Money doesn’t buy happiness.
Ask anyone making a lot of money, while working at a job they don’t like, how happy they are. You probably know the answer. Getting up every day and going to a job you despise won’t make you feel warm and fuzzy inside – no matter how much money you make.
What about the things that money can buy? A beautiful car. A giant house. A boat. Won’t those make you happy?
Most of the time, the answer is “no”. The problem is, you’ll always want something else… something better… something more exciting. As Strain says in his article, happiness comes from the opportunities that money makes available so you can do the things you want to do. However, if you don’t have any idea what these things are, there’s no amount of money that will bring you happiness.
- Buy memories, not things.
Along the same lines as #1 above, it’s important not to fall for the trick society tries to play on us. We’re told “stuff” will make us happy. The new suit or the expensive earrings. Yeah, that’ll do it. Those will “fill the void”. But it’s a con, a scam that we all buy into at one time or another.
Think about spending your money buying experiences and memories with the people you care about. Material things are fun and exciting, but that fun and excitement fades. The memory of special times and experiences with family and friends will last much longer than a new pair of pants or a hot, new car. Once you understand this, you’ll start getting much more value from the money you spend.
- Learn from your financial mistakes.
Making mistakes is a part of life. It doesn’t matter whether they’re financial or other life mistakes. As long as you learn from them, you’re way ahead of the game.
Do you remember the first time you touched a hot stove and burned your hand? The next time you approached a stove, you most likely didn’t put your hand on it like you did the first time. You didn’t want to get burned again. The same goes for making financial mistakes. It’s not a bad thing to make a mistake, even if you get burned. It may be the hardest way to learn a lesson, but most of the time, it’s also the fastest!
- Embrace compound interest (and investing)
The earlier you learn about compound interest and the enormous effect it can have on your money, the better. To retire early, you don’t need to make a lot of money throughout your lifetime. If you start saving small amounts of money early on (consistently), the interest will add up to more than you might’ve imagined.
And please, remember to invest. Whether you can do it yourself or need a trustworthy financial advisor, investing is crucial to wealth and retirement. You’ve probably heard the saying, “let your money make money”. That’s the entire point behind investing and interest – getting your money to work for you.
- Beware of Impulse Purchases
Impulse spending (buying things on the spur of the moment that you don’t really need) is one of the worst types of spending. It arises when you’re looking for something “material” to make you happy and typically results in credit card debt.
Once you establish your financial goals, you’ll be more careful with your earnings because you’ll know where you want to end up. Learn to be patient with your money and avoid impulse purchases (and the advertisements that promote these unnecessary products). This is a major step in getting your finances where you want them to be.
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