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Many people regret that schools do not teach important life skills, such as how to manage money.* Here’s my advice distilled from several decades of managing my personal finances — mostly with success but learning from failure.**

Work

• It’s better to be paid “less than you’re worth” than be unemployed. Dignity is more important than cash.
• If you think you can do the job, but they don’t, then offer to work FREE a few days per week for a month. You will be busy (good) even as you look for other jobs; they can decide if they want to hire you. You may even be able to network inside the company.
• Think long and hard before taking more money in exchange for a longer commute. Time is money.
• Have savings so you can dump a shitty job. Happiness may be priceless, but you need to pay the rent.

 Expenses

• Spend less than you make. That means reward yourself AFTER you get paid.
• Remember that it’s often easier to spend less than make more.
• A tax rebate is YOUR money. It’s not a gift. Put it in savings or pay off debt.
• Try to avoid cars. They are expensive and separate you from humans. 
• It’s cheaper to pay for a health club membership than heart bypass surgery.
• Invite friends to your house for drinks, not a bar. Cleaner floors, better serving sizes.

Savings and investment

• Always keep $10,000 (or 6 months living expenses) in your savings, as security.
• After that $10,000, allocate your money to cash/bonds and equities in proportion to your age, i.e., YEARS % in cash/bonds and  (100-YEARS) % in equities. If you’re 30, then its 30% cash/bonds and 70% equities. As you age, you will have more cash/equities and lower variation in your portfolio.
• Following Nassib Taleb’s advice, invest in high risk (high return) equities, not a broad market index.
• Don’t buy individual shares. Buy low-fee indexed mutual funds. (I use vanguard.)

Housing and debt

• Don’t get into debt for anything except a house. School loans may be a necessary evil — or just plain evil.
• Remember that buying and renting often cost the same, since the value of tax deductions and/or equity appreciation are reflected in the house’s price. 
• That said, you get flexibility with a rental, stability with a house.
• If you buy a house, then do so because you want a place to live, not as an investment.
• Do not lend/borrow money from friends unless you’re prepared to make it a gift.

Got other suggestions/ideas?

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* as well as eating well and avoiding pregnancy!
** I’m not a financial adviser, etc. If you make money, buy me a beer. If you lose money, write it off as “education”

2012-09-03 05:38:13

Source: http://www.aguanomics.com/2012/09/in-honor-of-labor-day.html