Keep it simple, keep it real. Sometimes down-to-earth “habits of highly effective investors” can indeed be surprisingly simple – and effective.
I don’t know what financial qualifications, if any, newspaper columnist Roger Montgomery has. But almost any one of his recommended “habits” could improve your financial situation.
For example – and I’ve added some of my own suggestions:
- Work hard/smart. Invest in your own skills. Encourage and support entrepreneurial leanings in (grand)children. Start and build your own self-employed sideline for all the control and tax benefits that approach offers.
- Pay yourself first. Reverse the common trend of spending first and saving whatever – if anything – is left. When you borrow money, you have to repay the lender first. So when a loan is repaid, add that former payment to the next most expensive loan. When all debts are gone, pay yourself first by having all or part of that snowballed payment redirected to a savings/investment program. If you don’t, that money will just disappear into general spending when it could have built your wealth – with no more sacrifice than when you were making those debt payments.
- Unless you pay off your credit card balance every month, learn to live without the card. So when the cash is gone, the spending must stop.
- Avoid the spending temptation of shopping malls, magazines, retail Internet sites. A sale deal isn’t a good deal if you really didn’t need the item in the first place.
- Learn about investments so you can make your money work as hard for you as you worked for it.
- Consciously separate wants from needs. Regularly rebalance (1) spending now with (2) some saving now to have more to spend in the future.
Focus on one of the easiest suggestions in the preceding list, then the next approach and so on. Look for progress rather than perfection. Your finances – and family, if you have one – will thank you.
Mike Grenby is a columnist and independent personal financial advisor; he’ll answer questions in this column as space allows but cannot reply personally. Email [email protected]
