Old Fashioned Money Management Advice That's Still True Today
Although the economy changes, some money-management advice is as true today as it was when your grandparents were just getting started. It has little to do with hedge funds or IRAs, and everything to do with good old fashioned wisdom.
You'll want to listen to advisors who can guide you through the most complex money issues. But for day-to-day living, it's hard to beat this simple, sensible philosophy:
Pay Yourself First
One piece of financial advice that's been around generations is to always pay yourself first. Part of creating a successful budget is setting money aside for the future, and Bankrate says that's how this advice is fulfilled.
Getting into the habit of paying yourself first might be one of the hardest parts of sticking to a budget. You've got a mortgage, car payment, utilities, and other monthly expenditures that seem more immediately pressing. But for every month that you fail to set money aside, you'll have to save more later. Get into the habit now, and your nest egg can do nothing but grow.
Credit isn't Money
Try to remember the last time you carried cash. Some people carry at least some paper and coin money, but more and more, plastic has taken its place. Debit cards let you use the money that's represented in your checking account. It's a convenient way to spend cash without carrying it. But credit cards do not represent actual money, at least not yours; they make it easy to spend someone else's money.
Credit gives the illusion of more available money. It's an expensive illusion, too, once the interest is factored in. Take the advice that your grandparents probably lived by: Live within your means, don't rely on yours and someone else's.
Cheap is Often Worth Every Penny
Cheap and inexpensive don't always mean the same thing. When you make a purchase, try to buy the best quality that you can afford. Cheap products, whether vehicles, clothing, electronics, or anything else you plan to keep, wear out sooner than their better-made counterparts. So in the long run, cheap can actually cost you more.
Buying the best that you can afford lets you make one purchase, and enjoy it the way you'd hoped. A higher-end TV will serve you for years, but a cheap knockoff may require replacement in a year or less.
Learn to Live Thrifty
We live in a spending, consumerist society where shopping has become a leisure activity. Some psychologists have even been known to "prescribe" shopping as therapy because of the euphoric feeling some people derive from spending money and acquiring new things.
Living thrifty is not just healthier for your budget, it's better for the environment. Find new uses for things you'd ordinarily throw away, shop at thrift stores to give castoffs a new home, and start eating those leftovers instead of letting them spoil at the back of the fridge. Any way you can conserve your own personal resources, you'll spend less and have more to show for it.
Old-fashioned money advice doesn't mean it's outdated. Much of it has reached "Tried and true" status because it always, or almost always, works.
So instead of buying on credit, give some credit where it's due. Grandma and Grandpa may have had it right all along. Spend less, save more, and use everything you've got. Your budget will thank you in the long run.
Mint.com can help you implement some of the best time-tested financial advice. With budget software that puts you in control, you can spot unnecessary spending, and watch your savings grow.
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