How to Make the Most of Your Money

Practical Advice, not a get rich quick scheme. There are some basic principles of managing your finances that will help you make the most of your money.

Instructions

Difficulty: Moderate

1. Get Out of Debt Get out of Debt and Stay Out. If you are in debt, you are paying interest each and every month. Your first step to making the most of your money is to pay off that debt. Before you invest, before you spend like a star, pay off you debt. My mother had a saying, “if you don’t have the money to pay cash, don’t buy it.” Those are sound words of advice. However, there are certain circumstances that financing is practical, for example, financing a home rather than paying rent is usually a good investment. Regardless, don’t borrow more than you absolutely have to and pay off the debt as quickly as possible.
2. Once you have your debt paid off look into investing through your job. If your company has a matching program or tax free investment options those are the best options. Anytime the company you work for is willing to match your investment take them up on it to the maximum amount possible. They are donating free money to your investment. If there are tax-free investments, such as medical or daycare flexible spending accounts, invest in them what you know you will use. This is a way of minimizing the taxes you pay on what you earn. Some flexible spending accounts only allow you access to your money if you have receipts for expenses. So, only invest what you know you will use. Monthly daycare costs, or orthodontist payments are stable expenses work well for flexible spending accounts. Check with your personnel office to find other options available from your company.
3. Investing on your own, only after you’ve paid off all your debt and you’ve maximized any investment benefits available through your employer. How you invest is a personal choice and requires some thought about your needs. People who aren’t risk takers will feel comfortable with low-risk investments such interest bearing checking, certificates of deposit from your bank, or savings bonds. However, the less risky the investment the lower the return. Younger investors often benefit long-term from riskier investments that offer a higher yield. Someone retiring in a year certainly wouldn’t want to put their money into a risky stock, but a younger person with a little more time before retirement would want to consider this option. There are plenty of websites that allow people to handle their own investments. However, unless you are financially savvy I wouldn’t recommend this. Many employers have options that allow you to invest through a financial advisor at little or no cost to you. Financial advisors often provide great returns on your investments.
4. Enjoy your financial success and the peace of mind that comes from knowing you are making wise financial decisions!