Money is simple; people make it complicated. We need simplicity, a means of looking at most of the money decisions we're asked to make and being able to say yes or no. In my new book, Money Rules: The Simple Path to Lifelong Security, the tips are brief on purposethey're made to remove complexity. Some are selfexplanatory, and for those that aren't, the logic is included. If you understand the whys, you're more likely to stick by these rules because they make so much sense. They're also easy to remember, because if you can remember them, then you can follow them.
1. Make More: Your job is your most important investment.
If the Great ugg boots uk Recession has proven anything, it's that your jobmore specifically, your earning poweris by far your greatest asset. Protect your financial security by treating this asset like any other investment. If your work profile is risky (you're paid on commission, or your job security is closely tied to the economy), it's like a stock. If it's more stable (you work for the government, or you're one of the lucky few who still has a traditional pension plan, or you're a tenured teacher), you're essentially holding a bond. In a stocklike job? Be a little less aggressive in your investments. If you have job security, you can take cheap uggs a bit more risk.
Take happiness into account.
The next time you're considering taking a job you really don't want to take "just for the money" remember this: Money buys happiness only to a certain point. Beyond that, more money makes no difference. As long as you earn enough to payyour mortgage or rent, put gas in a car that's not a clunker, eat what you want when you want to, take the occasional vacation, and, oh yes, save a decent chunk of whatever you're bringing in, more money will not make you happier. Coming up short on any of these basic wants and needs, however, can make you miserable.
One hour of your time is worth_____.
Here's a quick and dirty way to compute your hourly rate: Remove the last three zeros from your annual salary and divide the remaining number in half. For example, if you earn $30,000 a year, that gives you a rate of $15 an hour. If you make $100,000, it's $50 an hour. Use this handy formulain combination with your enjoyment or hatred of the task at handto decide when it's OK to hire someone and which tasks aren't worth doing at all. The weeding of the garden you could hire someone to do for $15 an hour? If you hate it and earn more, hire help. If you love it and earn more, do it yourself. And if you earn less, turn on some music, roll up your sleeves, and start digging.
Know your worth on the open market.
Are you worth more than you're earning? Or less? If you're underearning, you're losing money every day you're not asking for more. If you're overpaid, you're ripe for the chopping block, and you'd better update your skills or improve your productivity. Better yet, ask a friend or colleague, "What would someone with my skills make at your company?"
2. Save Tons: Count dollars like calories.
Research has shown that maintaining a food diary keeps even the most troubled dieters honest. The same is true of tracking your spending. Most people have absolutely no idea where their money goesparticularly their cash. Tracking works, whether you do it using a pencil and paper or a website or smartphone app such as Mint or Pennies. It will transform your financial life.
Live below your means. Period.
The key is to live on less than you make. This is nonnegotiable. Why? Because if you do it consistently, then you're automatically saving consistently. Aim to save at least 10 percent of what you earn. If you can't hit 10 percent, start by saving 3 percent, or 5 percentwhatever you can do. And if you can save more than 10 percent, then by all means do that too. Then watch that stash start to grow. You'll be inspired to set aside even more.
Carry Benjamins, not Jacksons.
Spending big bills is more painful than spending smaller ones. Instead of getting twenties from the ATM, get hundreds from the teller. They'll stay in your wallet, and you'll get richer.
There's no such thing as chump change.
One hundred dollars is not a lot of money. Save It every week, however, and invest it in a retirement account that earns a conservative 6 percent, and keep doing this for 30 years, and you'll have $435,557. In 40 years, you'll have more than twice that. And that is a lot of money.
Save every raise.
Here's what happened last time you got a raise: You celebrated by taking your guy out to dinner, splurged on that new coat you'd been eyeing, and started planning a vacation. Here's what happened to your net worth: nada. Make this a rule: Every increase in pay comes with a commensurate increase in how much you're socking away. In other words, the first call you make isn't to your significant other to share the good news; it's to the benefits department to ask them to increase your 401(k) contribution.