Personal finance tips to live by

Strategies to guide you on the road to financial health

For more than two decades, I have researched and written about money and how it impacts our lives. My book “Money Rules: The Simple Path to Lifelong Security,” offered personal finance strategies that have helped me (and I hope others) make better money choices. Many of those tips and strategies are timeless, and ring as true today as when I first learned them.

Here are some of the most meaningful personal finance truths I continue to practice and share:

Hope is not an investment strategy

Wishing you had saved more for retirement — or a home or an education — won’t make it so. It stands to reason that you can’t sit around and hope that one day everything will magically be OK. For those on the sidelines, and not yet saving and investing, it’s time to take action. And unless you are planning for the future and doing things to get yourself there, such as setting aside some money each month, you won’t. Remember, it’s never too late to start saving.

If you can’t see it and touch it, you won’t spend it

Consider this a pitch for having an employer deduct money from your paycheck and plunk it into a retirement plan before it lands in your checking account. The reason a 401(k) works so well for the vast majority of people is that the funds are automatically moved and then invested before you have a chance to spend them. If you are self-employed, make sure you are saving something for retirement by automating your savings. A good rule of thumb is to save 15 to 20% of your earnings.

You can recover from financial mistakes by saving more

We’ve all been there once. Or twice. We spent more than we could afford to pay off at the end of the month. Sometimes much more. It might not be easy, but you can dig yourself out of a financial hole and then save more in an emergency fund so that when your AC goes out or some other expensive thing breaks down, you can afford to pay the big bill without going into credit card debt.

Earn a decent living

This doesn’t mean you have to live to work without making a life for yourself. It means you need to make enough to be comfortable. Earning loads more than you need won’t necessarily make your life better. If you aren’t earning enough to make ends meet, though, consider going back to school or getting some training that will allow you to earn more in the future.

Live below your means

This means you need to spend less than you make, continuously, which can be really difficult in a world where shiny social media accounts make us think we need the latest and greatest. You can survive without a new car every few years. You will be fine in a modest home. And those big-ticket vacations can wait until you’ve saved enough to pay for it without going into debt.

Protect your financial world

If you are earning a living and supporting yourself and others, make sure you have enough protection, in the form of home, life, auto, disability insurance and an estate plan to ensure that no catastrophe can take it all away.

Don’t leave money on the table

If your employer offers a 401(K) match or any other investment account match, take it. Not investing a small amount of your own cash to earn the match is equivalent to letting hundred-dollar bills fly out the window.

Give back in a meaningful way

While it’s absolutely the right thing to do, it will also make you feel more fulfilled in life when you find a way to volunteer your time and resources for causes close to your heart. Research shows that people who volunteer live longer and are healthier than people who don’t.

Jean Chatzky/SavvyMoney  May 2022

With reporting by Casandra Andrews