16 money rules you need to follow if you want to be successful

Most people want to be financially successful, but knowing what to do, how to invest, and which pitfalls to avoid can be challenging. Maybe you’re looking for easy ways to grow your bank account or tips for reducing your overall spending.

There is no foolproof way to build wealth, but these are some of the most commonly accepted and proven methods.

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1. Start saving for retirement early

Retirement may seem out of reach, but that doesn’t mean planning now is less important. Saving now allows you to set aside smaller amounts to help you pay for your retirement years.

If you start saving at age 25, you may have enough money to retire early. If you start saving now and use a broad tax-advantaged plan, you may have enough money to retire before age 50.

Make sure you invest wisely, control your spending, and maximize the tax benefits you can get.

2. Track your spending

Where does your monthly money go? You probably know exactly how much you’re spending on your mortgage or rent, but what about coffee, dining out, and trips to your favorite boutiques?

The best way to see where your money is going is to track your spending regularly. You can jot down your expenses on a notebook or use an app on your phone.

Make sure to include all purchases. Then, check out this information to see where you can save even more money.

3. Spend less than you earn

While the advice is simple, it’s not easy to do. One way to get started is to move to an all-cash budget. If you only buy things you have cash on, you will have to give up what you put on your credit card.

A cash-only budget forces you to decide whether any purchases you make that month are worth the investment. If you can’t pay off your credit card, these purchases will cost you much more than the original price after you add 15% or more in interest.

4. Do not carry credit card balances

Consider the cost of credit. If you put money in a bank savings account, you may get less than 1% back on that money. However, if you borrow money from a bank, such as with a credit card, you will be charged 15% or more.

Credit costs are high. The best way to avoid debt accumulation is to avoid using it or pay off your entire balance in full each month.

5. Buy car insurance every year

There is no downside to buying car insurance every year. You can save money by finding a policy that still fits your financial needs at a fraction of the cost.

Some insurance companies may offer significant discounts if you become a new customer. Or, if you get a quote from a new insurance company, you may be able to negotiate with an existing company for a better rate.

Check out these other creative ways to help you save on car insurance.

6. Make money while you sleep

It sounds like a dream, but there are ways to do it. This is called building passive income, and it means you don’t have to actually work to make money.

There are multiple ways to do this. Create and sell products online based on your knowledge or experience in a field. If you have a specific skill, create a course and sell it online. You can also earn passive income by owning real estate or investing wisely.

7. Prepare at least 15% for retirement

As you work to manage your budget and increase your income, you should also try to increase your retirement savings to 15% or more of each paycheck.

Setting aside at least that much for retirement may allow you to see a significant increase over time due to compounding interest.

Make sure to increase your retirement benefits as your income increases.

8. Ask for a raise the right way

Many people think their employer will offer a fair raise, but if you’re ready, you can influence the value of the raise. Do some research to show your employer how much more you should be paid and how much.

Use information from job listings for similar positions to show your boss a competitive salary in your field and your experience. Be sure to outline your accomplishments over the past six months.

It’s also a good idea to create a formal written raise request so you can clearly state your situation. Now is the perfect time to roll up your sleeves, be confident and use the research skills you developed at university.

9. Don’t be afraid to switch jobs when needed

Sometimes you should probably ask for a raise, and sometimes it’s better to find a new employer. If the market shows you’re not being paid fairly and your employer isn’t willing to budge (perhaps the company can’t afford it), it’s time to stretch your legs.

Or you may want to consider changing jobs to continuously develop and improve your skills. A new position may bring greater challenges, more opportunities for advancement, or more interesting assignments. Consider changing jobs as a good thing and a way to achieve your career goals.

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10. Use the 50/30/20 rule for budgeting

Keep this rule in mind when setting a budget for yourself. Spend 50% of your income on needs, 30% on what you want, and save 20%.

It sounds simple enough, but when you go down this path, you’re creating a way to save a lot of money, pay your bills, and not feel deprived of something you really want to buy or enjoy.

11. Don’t spend all your winnings

Getting a raise or bonus means you get some extra money that isn’t factored into your current budget. If you’re already living comfortably, think about how to use your new funds in the way that’s best for you.

Sure, taking a vacation or buying a giant flat-screen TV sounds great, but putting some of that money aside can help you achieve other goals, like building your emergency fund or saving for a down payment on your home.

Use the new money to pay off some debt or put more money into retirement savings.

12. Start investing

Investing is an excellent way to make your money go further. It allows you to build up your savings and create a little financial fortune for yourself.

One way is through a financial advisor to assess your risk tolerance and suggest investment vehicles. You can also use a robo-advisor or online brokerage firm to help you get started investing.

13. Create an emergency fund

Using credit can be a big and costly mistake, but in an emergency, you may have little choice. One way to address this is to create an emergency fund.

Put three to six months of wages into a savings account or money market account to help pay if you lose your job, get sick, or just need to fix your car.

14. Automatic savings

It may be a good idea to manually transfer money into your savings account or retirement fund, but you may forget or find other uses for the money.

Instead, automate the process by authorizing your bank to transfer funds to specific accounts on a regular basis. By automating the process, the risk of those funds not going where they need to go is reduced.

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15. At least 20% down payment when buying a house

There are many loan programs where you don’t have to pay 20%, but if you can, you’ll save money over time.

First, if you pay less than 20% of the purchase price, you will have to take out private mortgage insurance. Second, you risk having your house “under water” for several years, which means you owe more money than the house is worth. A bigger down payment also means you’ll lower your debt load.

16. Buy a used car

Buying a used car means you pay far less than buying a new car. New cars lose 20% of their value in the first year.

If you only need to own a new car, plan to drive it for at least 10 years to get the full value from the investment.

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There are also many things you can do to save on everyday expenses. When you’re grocery shopping, make a weekly menu plan based on specials and always make a list so you don’t overbuy.

While some of these money rules are easier to practice than others, being aware of the money you earn, save, and spend will help you succeed.

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This article originally appeared on FinanceBuzz 16 Money Rules You Need To Follow If You Want To Be Successful.

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