Principle #1 – Pay Off Your Debt
It cannot be emphasized enough: unless you are young and are planning to get a number of very large raises in your lifetime (or are temporarily ill), then you shouldn’t be accumulating debt. You should be paying it down and saving for retirement. The successful know and practice this.
Principle #2 – Start Saving Early
Start saving early. Investing $10,000 at age 30 will yield you much more in retirement than $10,000 invested at age 50.
Principle #3 – Avoid Putting Yourself in a Precarious Financial Situation
The successful know that some risk is unavoidable, but where it is avoidable, it should be dealt with intelligently. If you are constantly putting yourself in precarious financial situations, it may be time to rethink your finances and your approach to money.
Principle #4 – Don’t Drive Yourself into the Ground
We all go through hard times in our lives where the money isn’t flowing. But when this is the case, you must cut back and live simply. Don’t drive yourself into the ground financially, as the consequences are likely to manifest well into the future.
Principle #5 – Keep Track of Your Finances in a Spreadsheet
Instead of hoping that your finances will work themselves out, play a role in shaping your financial future by keeping track of everything in a spreadsheet. This is often the difference between success and failure in personal finance.
Principle #6 – Make an Effort to Cut Your Expenses
If your expenses are too high, then cut them. Move into a cheaper apartment. Buy bargains at the grocery store. Use coupons. Cut back on entertainment expenses.
Principle #7 – Be Thrifty Where Possible
When you’re poor, thriftiness is a virtue. If you’ve fallen on hard times, you would be wise to be thrifty, rather than delusional about the state of your finances.
Principle #8 – Get in the Practice of Creating and Following Budgets
Budgets can play an important role in stabilizing financial outcomes. If you currently have no budget, you should start making one on a weekly basis. Try to keep your expenses and income flows under control, so you don’t get behind on payments.
Principle #9 – Try to Cut Your Spending by 10% Per Month
If you’re currently over-budget, consider cutting your expenses by 10%. Even if it seems hard to do initially, figure it out and do it.
Principle #10 – Pay Your Bills on Time
When you miss a bill, you get charged fees. So, instead of paying your bills on the last day, pay them first. If you have money left over, then use it for other purposes, but don’t do so until you have paid the bills.
Principle #11 – Set Financial Goals
Don’t just dream about your finances getting better. Set financial goals and commit yourself to accomplishing them. This will keep you on track with your finances; and will give you something to look forward to.
Principle #12 – Invest in Your Career
Just like any other investment, an investment in your career could pay off considerably down the line. If you are currently missing the education or the training that you need to move forward in your career, then put some money aside to invest in your career.
Principle #13 – Consider Going Back to School
If you’re unsure of what to do on your current career path, then consider going back to school. Test the waters and figure out what it is that you want to do—or have an aptitude for; and then try again with a different career path.
Principle #14 – Keep Your Credit Card Balances Low
Try to keep your credit card balances under 30% of the total allowable limit. If there is some emergency, you will have a back up reserve of credit that you can use to get through it.
Principle #15 – Pay Credit Card Balances in Full
If you can, pay your credit card balances in full each time. This will prevent you from ever paying interest on the debt you are servicing.
Principle #16 – Shop Around for Insurance
When it comes to car insurance, there’s a good chance that you might not be using the best place. Instead of being complacent and sticking with your current plan, consider shopping around to find a better one.
Principle #17 – Avoid Unnecessarily Risky Investments
Instead of picking stocks, put your money into a mix of high-yield and low-yield bonds. Or into a fund that is well diversified and offers a reasonable, but low-risk return.
Principle #18 – Put Money in Index Funds
Instead of putting money into individual stocks, put your money into index funds. Successful investors know that, over time, you cannot consistently beat the market without taking on a significant amount of risk in the process.
Principle #19 – Seek the Help of a Financial Advisor
When you first start to invest, seek out the help of a financial advisor. The successful know that it is not possible to know everything; and that getting the advice of a professional is always a good place to start.
Principle #20 – Shop Around for the Best Mortgage
Another thing that people who are successful in personal finance generally do is shop around for a mortgage. Instead of simply taking the first that they are offered at the first bank they go to, they test the waters with a number of different companies to try to get a lower interest rate.
Principle #21 – Don’t Buy a Big House if You Cannot Afford It
Locking yourself into a big mortgage payment is a very bad idea—especially if you have a shaky income. Instead of risking the possibility that might not be able to make the payments, settle for a smaller house or an apartment until you have financial capacity to make the payments on time.
Principle #22 – Consider Visiting a Mortgage Broker
Visit a mortgage broker. Even if you ultimately do not use one of the companies she suggests, you can get a feel for what is out there in terms of payment sizes, interest rates, and other important features.
Principle #23 – Look into Taxes Associated with Homeownership
No matter where you live, there will most likely be taxes associated with homeownership. When switching from an apartment to a home, keep this in mind.
Principle #24 – Negotiate Selling Prices on Large Purchases
One stark distinction between the successful and the unsuccessful is that the successful are always willing to bargain. Even if it means that they’ll have a much less pleasant buying experience, they’ll spend hours haggling if it means they can cut hundreds or thousands off of the price tag.
Principle #25 – Compare Different Types of Mortgage Products
In addition to shopping around with different banks, you will also want to shop around for different mortgage product types. For instance, if the size of the mortgage payment will be high relative to your monthly income, then you may want to consider looking for a fixed rate.