10 most important things about personal finance that someone without a finance background must know?
1. Job, gives you payback:
This is one thing that many people overlook. Getting a job teaches you so much about finances, discipline, and consistency. You will not get rich from a job with a steady paycheck, but it’ll teach you what you don’t want.
2. Don’t expend your expenses:
Save at least 50% from each paycheck. Most people call BS on this. They complain that it is impossible to save 50%. Well, how were you living before you got your job?
3. Financial education:
Reading about financial information is boring. Most people don’t do it. Most people aren’t very good with their money. Figure out if personal finance is important to you; if it is, you will not be bored.
4. Invest your saved money:
Once you understand certain areas of the market, you may know more than even professional investors. Most people don’t understand that they are an expert at something. Whether it’s fashion, energy, food, or whatever… everyone is knowledgeable about something they are passionate about. Apply that to your investing.
5. Understand that, you can still be wrong.
Even if you are absolutely positive something is going to happen, you could be wrong. This has nothing to do with pride or reputation, because when the market smacks you done, there is nothing you can do. Always have an escape hatch and never commit everything you have to one investment.
6. Understand confusion in financial world:
There are hidden fees in all kinds of products. There is jargon in financial disclosures that are intentionally written to confuse the consumer. Understand that this is purposeful.
7. Don’t underestimate your qualification:
Looking up to the ‘greats of finance’ it may be intimidating. And yes, some of these people are brilliant with high IQ’s. But, most of them just work their butts off. That’s how they made it – they just put their head down and worked.
8. Learn from technology changes:
It’s a common thing to say, “Oh this time it’s different!” It happened during the year 2000 when everyone said that the internet would change everything. It happened with the housing market in 2008. It’s happened countless times in history. Yes, there will be new technologies and break through inventions, but the market always reverts to it’s mean. Everything from our lifespan, to the seasons, to animal migrations, to the markets are cyclical.
9. Figure out outstanding with your balance and success:
If you’re not happy pursuing a financial goal, you will never achieve it. You must have passion and desire to really want to learn and succeed in finance. Make sure you are consistently happy along the journey, or it may turn into a nightmare.
10. You may not have a great start but don’t be intimidated:
Looking at the richest people in the world we see a lot of very educated and smart individuals. We see people who inherited money, got lucky, or just had a natural talent for being successful. But, there are also an equal amount of people who didn’t even graduate high school who are massively successful in the finance world. Don’t be intimidated. You may have a steeper hill to climb than most, but you can get to the top.