Money Tips 51 to 60 Explained
Money Tips 51 to 60 Explained (#MoneyTips)
Time for my sixth set of 10 money tips to gain an explanation, after all, it has been a
little long while. I have posted my money tips to Twitter (using the hash tag #MoneyTips) and found that some of them were very hard to keep within that magic but annoying 140 character limit (can you tell I started this before twitter changed to 280?). So far, I have managed it, however sometimes a little of the meaning seems to get lost, and occasionally I wanted to add a little more explanation. This is where I do it.
Money Tips 51 to 60:
Middle of the road tips. No real order (as always). And of course, along with past and some future ones, are all listed on the Money Tips Explained page if you are after more.
- Expensive and cheap can swap places when quality or time get involved.
- Not wanting to spend too much I decided to buy a cheap pair of shoes for my first real job. You know, the kind where you are expected to dress up. They cost $50 and were a bargain compared to the $120 pair I saw at the previous shop. Within 9 months they had broken, and I mean really broken, with bits falling off all over the place. I went a bought that $120 pair, and they lasted me about 4 years before needing replacing. I will let you do the maths to find out which one was “cheap” and which was “expensive”!
- Shop around for big purchases and frequent purchases. Ask for a better price.
- Large purchases like a car, or frequent purchases like coffee, milk, bread, and mobile phone contracts are both things where the savings can add up. Larger items, when you apple a percentage discount, can really add up. The ultimate example would be a house, where a small 5% discount on a $500k house is $25k! On the other end of the scale if you pay $3.50 for milk from the corner store every week you are paying almost $80 extra a year. If you add this up over even just a few items you start to notice the difference.
- You will never fully appreciate diversification until a downturn.
- Until the GFC back in 2008, I always looked upon my “high interest” and equivalent “investments” as almost wasted money. They were sitting there, where I was getting fantastic gains from my real investments. It did not take too long after watching some of my “real” investments drop 50% in value before I returned those cash investments to their rightful place. It really is a risk vs reward game, but make sure you understand the real risk.
- If you don’t understand financial advice, find someone to explain it.
- I don’t think this one needs any explanation. … Kidding. This simply means that you should not rely on other people’s advice just because they are financial planners or advisers. If you don’t understand what it happening with your money, you should ask. The level of detail you go down to is up to you, but always ask yourself this question: “if things go wrong who loses out?”. One of the best ways I have found to make sure I understand is to explain things back to the person using your own words (or try to explain it to someone else if you can). This will help to make sure you understand rather than just hear.
- When comparing products focus on the features you need, not the “extras”.
- A classic one here is credit card points. By all means get a card with fantastic points, but think about what those are actually costing you. If you are paying interest on your credit card, those extra points will not be worth the interest you are paying. And if you have an AMEX card, is the extra 1.5% AMEX surcharge some places charge worth it, or do you break out another card or cash at those places?
- Another example that I came across recently was when buying a drill. One cost $110 for 800 watts of power and had everything I needed, the other was only $140 ($30 more), and was 1500 watts. I flipped back and forth a number of times until I settled on the lower power one. Thankfully I did, because one aspect I forgot to check was the weight of the drill, and after a few days straight holding that thing in the air my arms were thanking me. Even if they were the same weight I didn’t need that extra power, and still haven’t to this day.
- Just start with 1 bad financial habit and replace with a good one.
- Fixing everything in your financial world can be daunting. So just start with 1 smaller thing. If you always go out for coffee every morning, try cutting down. If you always forget to pay your bills on time, start by turning one into direct debit, or adding a reminder in your calendar. See Domino #4 in the Domino Your Debts section of the Barefoot Investors 9-steps to financial freedom.
- A side hustle brings in money when you may have been spending it. Double win!
- If you could be shopping or mowing someone’s lawn which would you choose. I am not asking which you would enjoy more, I am asking which you would genuinely choose. You may think that shopping may only cost you $50 for a new top, but what I am trying to say here is that it is not just costing you $50. It is also costing you $50 for the lost income that you could have made while mowing. Of course I am not trying to say you should work 24/7, but just trying to highlight that a side hustle can not only bring in money, but also keep you engaged while you may have been bored and spending more than you needed to.
- Research salaries before you have your next remuneration review. Ask for more.
- There is nothing better than going into a performance review and being able to put forward your case for a higher salary in a way that works. I am not saying it is easy, or that it will work, but having information on your side can help. If you know what inflation has been over the last few years, what your pay increases have been, what others are making, and what other jobs/ads are offering, then you are in a much better place to justify a raise. Even this explanation is just a tiny example, and I am sure people have written many blog posts on the topics. So do some more reading for other ideas on this topic too.
- Your close friends have a huge impact on your financial life. Pick good ones.
- Just like #57, what are your friends doing on weekends? Are they going for a picnic or to a bar for cocktails? Or are they working on their brand new start-up idea? The people you spend time around will have a massive influence on your life and how you spend your time and money. I am not saying that you should get rid of your friends (although in extreme cases that may be needed or just happen), but if they are true friends they should be supportive of you if you are trying to improve your financial life. I know I have friends who have been in a bit of a financial bind before. For a year or two we made a conscious decision to always spend time at each other’s houses or at a park where you could bring your own food rather than even inexpensive restraints. They key for us was everyone being open and upfront about it.
- One new good financial habit a year can change your life forever.
- Similar to #56 good habits make your life both better and easier. You don’t have to remove a bad one to start a good one. However they key with most habits is that you have to keep doing them for them to become a habit! One thing I started doing years ago was tracking my finances every month. Initially it seemed like more effort than it was worth, but over time not only did it get easier, but it also got more rewarding. I could see the decisions I made build up over time. No motivational speaker will ever be as encouraging as seeing your own success over time. Start small and stick to it.
So that is it for another 10. I hope you enjoyed them. Let me know in the comments below if you disagree with any. I am always open to having my mind changed, but just like #58 I need a good argument/reason to do so.