As someone who has owned 4 businesses before my 30th birthday, family and friends regularly ask me about investing, retirement planning and overall, what are the best ways to have more financial security.
Follow these simple rules and you’ll be well on your way.
Top 15 Rules for Retiring Wealthy:
- Always spend at least 10% less than you make. Always have a savings plan and understand that most people who “look” wealthy are just in a bunch of debt. Don’t be that family. Look comfortable and BE wealthy.
- Spending, Saving and Giving are all habits. If you spend every dime when you make $2,000/month, you’ll spend all that you have when you make $20k/month. Develop spending, saving and donating habits immediately!
- The quickest way to “make” money is to pay off debt starting with the highest interest credit cards and loans first. It’s a guaranteed Return on Investment (ROI).
- Never put more on a credit card than you can pay off each month. If you can’t pay it off each month, shred the credit card and pay with cash or debit cards for everything.
- Once the high-interest debt is paid off, save up 3-6 months in savings for a rainy day.
- Know your budget and don’t break it. How much are your housing costs? gas, grocery bills, Starbucks purchases, gym memberships, car payments, insurance, cell phones, internet, cable TV? Track your purchases every month (Mint.com is a decent way to do this) and make sure they are under budget. Reward yourself with a dinner out or other fun activity for each month the budget is met. Just make sure the reward is also budgeted.
- Compound interest is the most amazing invention in the world so invest early and often.
- Max out any employer matching 401k’s or IRA’s. It’s like getting a guaranteed 100% ROI.
- Never consider your primary home an investment. By the time you pay utilities, taxes, maintenance, interest, and insurance a home is nearly always a loss. However, that’s not the goal of a home anyway.
- Short-term investing is extremely hard to do well. Long-term investing is extremely easy to do well.
- Learn how to minimize taxes legally. Taxes are your biggest individual expense BY FAR.
- Statistically speaking, money managers don’t know jack. Very, very few are accurate over the long-term.
- The most expensive thing in life is ignorance. Investing, like everything else, takes some homework and a commitment to learn.
- Never buy toys with debt. If you can’t afford to pay cash for motorcycles, quads, dirtbikes, jet-skis, razors, boats, vacations or anything else non-essential, then you can’t afford to have them. In other words, ONLY consider debt to buy a home, business, primary vehicle and some college degrees.
- Delayed gratification is the number one predictor of long-term success. It’s more accurate than IQ, EQ, SAT’s, ACT’s or any other tests ever administered. In other words, spending an extra $10k to get a nicer car today can mean having $50k less when you go to retire. Discipline yourself to be an expert at delayed gratification.
Here is one of the best articles I’ve come across for a nearly foolproof plan for a healthy retirement. It lists out exactly where to invest your IRA and 401k dollars each year.
Start with the book that is referenced, If You Can: How Millenials Can Get Rich Slowly, as it is only about 35 pages long, costs less than $6 and is available for Kindle.
Warren Buffet (one of the top 3 richest men in the world for several decades) told us 30 years ago the simple secret to investing and he predicted, quite accurately, that almost no one would listen.
Do you think there are any other investing or money-management rules that are missing?
To your healthy and secure retirement,