Financial Advice That Has Stood The Test of Time
At Loans Canada, we’re always trying to give you the best advice possible, in the interest of helping you secure a solid financial future. However, any knowledge that we’ve dished out over the years had to come from somewhere. In fact, it’s likely that the majority of the financial advice you’ve received in your lifetime has evolved from the classic money saving tips that we all know and love (or at least love to ignore). While there are of course many variations on each of these pieces of advice, they all boil down to the same goal, save as much money as you can and try to make smart financial decisions.
Here are 5 money tips that have withstood the test of time.
A Penny Saved, Is A Penny Earned
While variations of this expression can be seen as far back as the early 1600’s, the more popularized version is usually attributed to the one and only Benjamin Franklin from his 1737 almanac column: “Necessary Hints For Those That Would Be Rich.” Although in the column, the saying actually reads: “a penny saved is twopence dear,” the advice within the expression is one of the truest, simplest forms of financial know-how. It means that if you decide to save your money rather than spend it, it will benefit you more because you’ll have it stored away for the future. You can then spend it on more important things, like buying a house or putting it towards your eventual retirement. With every paycheck you get, it’s a good idea to deposit a portion into both your chequing account and your savings account.
If you’re considering setting up automatic savings and payments, click here.
Don’t Live Beyond Your Means
Another bit of old-school methodology, this tip is for the overspenders. What does it mean? Let’s say you’ve just been given a raise at your job. You might be tempted to spend it right away on things you won’t need, like upgrading to a new cell phone, or a newer model of car. True, a little celebration might be in order, but there’s a big difference between spending a bit of that money on a night out with friends and spending it all on one big item then ending up in debt because of it. Just because you have the extra money, doesn’t mean you should go throwing it away.
However, this advice works very much the same way as the tip above. The money you’re getting from that raise is better spent by saving for the future or investing it in an RRSP account for your retirement. Even if you have extra money in-hand, it shouldn’t be an excuse to stop using a budget, or thinking about the various expenses that you’re making. When that promotion comes, it’s OK to treat yourself a bit, go out for a nice meal and some drinks to celebrate, but it will also work in your favor to pay off any debt you have, then invest it wisely from that point on.
Hope For The Best, Prepare For The Worst
This phrase doesn’t just relate to doomsday preppers. Essentially, this advice tells us that while things may be going well right now, both medically and financially, it always pays to put money aside in a “rainy day” fund, just in case a situation might occur that’s out of our control and things go downhill. The fact is that you never know what’s going to happen. You or a loved one might suffer a medical emergency and be unable to work because of it. There might be sudden budget cuts at work or you might become unemployed. Maybe an incident involving your house or vehicle costs thousands of dollars to fix. One of the biggest mistakes a lot of people make is not having a rainy day fund set aside to help them out in the event of a financial emergency. Whatever that financial crisis could be, while it might not be happening now, it’s a smart idea to save up, just in case it ever does.
To read our Essential Guide to Saving, click here.
Let Your Money Do Some Of the Work
We’re always telling you to do something with your money, budget it, save it, spend less of it, work hard for it. But one of the best things you can do for yourself is to let your money do some of the work for you. We’re talking about investing it. There are a lot of investment opportunities these days that can yield a large profit in return if you take the time to research them properly and make sure that they’re legitimate ventures. True, most of your income is best kept safe and stored away in a chequing account, and a tax-free savings account. However, it’s can definitely be a good idea to take small amounts of it and invest them in low-risk mutual funds, or any other kind of investment account that will gain interest and compound growth. This way, the money you do decide to invest will earn you back money bit by bit, and you can add it on top of the income you’re already earning. However, it’s important to realize that these investments do come with risks, some more than others, which is why you should always speak to a financial advisor who can help you decide where and when to invest your money.
Invest in Yourself As Much As Possible
This advice comes straight from the mouths of a lot of self-made millionaires, investors and philanthropists including Warren Buffett and Paul Clitheroe. First and foremost, it means that if you believe in yourself, invest in yourself too. If you have a skill that you feel confident will get you ahead in life, the only way that you’ll know for sure is by taking the time and money, and getting the proper training or education required to make it happen. Maybe you’ve been offered a job outside the province or country that pays well and gives you the possibility of new opportunities. It might be hard to leave your loved ones behind for the time being, but it might also benefit you greatly in the future. Either way, if you don’t have any confidence in yourself, you might never get out of that job you dislike or get to showcase your talents to the world.
Ask yourself, what’s more important to you? Being debt-free or investing in yourself and taking on some debt in order to have a fulfilling career? Whatever you decide, just remember that if you’re already in debt, it’s better that you pay it off first, then save up a bit before you start truly investing in yourself. Afterward, if you’re skilled and confident enough to show your talents to others, maybe they’ll invest in you as well. If you can’t afford to invest in yourself right away, at the very least, you should be working towards it. Make yourself a nest egg, work nights, weekends and overtime if need be and with enough gumption, you’ll get there eventually.
Check out last year’s Top Paying Jobs in Canada.
Save For The Future
Essentially, it all comes down to the most basic and important advice you can get, and it’s something that the Loans Canada Team can never stress enough. Save up and spend wisely, because your healthy financial future is one of the best possible long-term investments that you can make. A dollar here, a dollar there, it all adds up somewhere. So, it’s always best to learn how to make a budget and stick to it, because you don’t want to still be working your hands to the bone in your golden years when you should be enjoying them.