Making sense of what you want to do with your money.

1. If you’re going to invest (which you should), buy inexpensive, diverse, mutual funds.  This will limit the risk whilst giving you the greatest shot at a good return.

You don’t always have time to manage your investments and whatever life throws at you all at the same time.  This is why it’s important to have your money managed professionally by someone who does this full-time.  Wouldn’t it be nice to know that your money is constantly being watched, maintained, and used to plan your future wealth?

Diversity is key to surviving the risks associated with the stock market.  Knowingly or not, investing yourself could lead you to owning a one-dimensional portfolio, the most risky of them all.  And while there are plenty of success stories associated with people putting all their eggs in one basket.  There are ten times as many instances of people who have taken the risk and fell flat on their face.

2. Save a small amount of money, even if it seems insignificant at the time, it will grow.

Putting money aside can seem logical for obvious reasons, but a lot of people (including myself) don’t seem to have enough money to save.  Generally speaking, most financial experts will advise you to save 10-20% of your income.  This number is most likely extremely high for most people, which is why I went ahead and modified it.  Instead of looking at percentages, take out two expenses you don’t need (such as beer, snacks, etc…) and use that money to be put into a savings account for the future. This type of responsible spending will guarantee you have something to fall back on for the future.

3. Make major purchases only when you have prepared for the lack of money you will have post-purchase.

Sounds like a mouthful, but it simply means don’t buy huge stuff unless you can really afford it.  And no, I don’t mean when you can buy the item, but rather when you can afford to cover everything else.  Don’t risk putting yourself further into debt.

4. Get the largest insurance deductible you can.

You want to be ready for the unexpected, even if it means sacrificing a lot in the meantime. Inevitably, bad things happen, and it’s always better to be ready for the worst-case scenario. If you choose this route however, make sure you have money aside so that you will be able to pay your deductible when a problem does arise.

5. Stick to the plan

Probably the hardest thing to do with your money is to consistently operate in a fiscally responsible manner.  This means practicing smart decisions as a lifestyle, and not a temporary means to save a quick buck.  It’s the same thing with exercise, one run on a random day won’t make you a marathon runner, but over time, you will become better at what you do.  

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