We all make mistakes, and costly ones can be problematic. When we don’t use wisdom, it can be easy to fall into traps that will cost us not only in the short-term, but also long-term. This is especially true in the area of personal finance. In a recent discussion online, people shared lessons they wish they learned earlier. Here are 12 of their top recommendations.
Table of Contents
Be Content With What You Have
Easier said than done, but there may be no more important finance lesson to learn than this one. In the forum, one user shared, “Probably not what you’re looking for, but honestly: Comparison is the thief of happiness.”
Comparison is also the thief of wealth.
Avoid Lifestyle Creep
There’s nothing wrong with spending on items you want, but it can get out of hand. One Redditor notes, “Lifestyle creep will significantly eat away at longterm financial gains when income is increased.”
Tracking your spending is a helpful way to avoid lifestyle creep. Pair that with specific goals and you can keep frivolous expenses in check.
Watch Who You Associate With
Friends make life more fun to live. However, it’s important to know who you’re traveling through life with. “Your future financial life is greatly influenced by people you associate with. This is especially true of your choice of life partner. The reason is that you pick up attitudes about money. If your friends can’t manage money, you will think this is normal, ” notes one person.
Life is a sum total of many things. Associate yourself with people who hold similar values and you’ll go farther.
Understand Your Investments
Investing is a must if you want to grow your wealth. As one Redditor says, “Never invest in something you don’t fully understand.”
This fits with the Warren Buffett axiom that states “Risk comes from not knowing what you are doing.” If you’re uncertain of how an investment option works, look elsewhere.
Budgeting Is Personal
Living on a budget is important to manage your money. However, some experts believe it’s a one size fits all approach when it comes to budgeting.
That is not the case. Personal finance is personal for a reason. You need to allocate your budget in a way that fits with your particular goals. Do that, and you’re much more likely to achieve success.
Avoid Pricey Cars
Cars are fun, but they’re a depreciating asset. One Redditor argues to “Drive a beige Corolla.”
Cars like Toyotas are reliable, and get you from point A to point B. That’s all you need.
Plan For the What-Ifs
Life is full of the unexpected, and that may include a large unplanned expense. One person says “Life happens, so have margins in your budget for when life happens.”
Having a fully funded emergency fund is the best way to avoid debt in these circumstances. If you don’t have one, make a goal to save $500, then $1,000. You’ll be well on your way to building a financial safety net.
Treat Yo Self
Saving money is an integral part of a sound financial plan, but you only live once. One person says, “It’s important to save, but don’t be afraid to spend some for enjoyment. You might not be around later to enjoy all you saved.”
Life is meant to be enjoyed. Enjoy the unplanned. Take a fun trip. Do something spontaneous. It makes life more fun.
Saving Only Goes So Far
Cutting costs is fantastic, but it’s not everything. One person argues, “You will never save your way into wealth. You must be willing to take calculated risk and learn the principle about OPM (other people’s money).”
Saving money is foundational, but don’t stop there. Look for ways to grow that savings.
High-interest debt can kill your finances. A Redditor argues, “Never carry a balance on your credit card. Always pay it off, in full, every month.”
Even if you use a rewards credit card, pay it off in full every month. Nothing is worth racking up debt for.
Watch Small Expenses
Small expenses often seem insignificant, but they add up. One person notes, “Keep on top of the little expenses like subscriptions and other seemingly small expenses. They seem minor but they really add up.”
You don’t want to kill your budget by a thousand paper cuts.
Comparison is the Thief of Joy
Social media is great, until it isn’t. It’s helpful to stay in contact with friends, but it can go too far.
One commenter explains why, saying “Don’t compare your life to your friends life on instagram (better yer just quit social media if you can)
Focus on increasing your income, living within your means and saving your money to spend on whatever is important to you and fulfills you. Life is short.”
Sound words indeed.
How to Multiply Your Money
Get-rich-schemes are typically scams. However, there are ways to truly grow your wealth. While not flashy, they can help you build real wealth.
11 Best Passive Income Apps of 2023
Passive income is a great way to achieve your financial goals. Thankfully, there are apps that help you start and often with minimal resources. Get started today!
How to Save Money on a Tight Budget
Saving money feels impossible when you’re struggling to make ends meet, but you can do it. Use these tips to save money each month, even on a tight budget.
23 Side Hustle Apps to Make Extra Money
Earning cash on the side is a fantastic way to make ends meet. But, which opportunities will help you the most? Side hustle apps connect you with good-paying gigs in your area so you can earn money in your spare time.
Signs You’re Financially Stable
Financial stability is the foundation to achieving financial freedom. Learn how financially stable you are and where you can improve.
This thread inspired this post.
I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.