By Cary Siegel
If you always live below your means, you will always have extra money to save and invest.
The following are every dad’s three “must teach” principles in personal money management:
• Always live below your means. If you want to manage your money successfully, this is one of the most important principles to follow. If you always live below your means, you will always have extra money to save and invest. Over the years, your money will grow and you will find yourself with significant financial security. Keep in mind that living below your means doesn’t mean living badly. It means you prioritize your spending and focus on what is most important to you. It means “living smartly.”
• Develop a written budget and evaluate it every single month. You can’t manage something you’re not tracking. And the concept is clear – more money must come in every month than goes out! Where did you spend too much? Where didn’t you spend as much? What else do you need to include next month? What is in your emergency fund? What are your financial goals for the next 12 months? And remember, you will always have tradeoffs!
• Save and invest 50 percent of every salary increase. This is an easy principle that requires a little discipline. Most people don’t do this because they get behind in the first place. They start by spending more money than they make in the first place. You just can’t do that. If you employ this principle, you will be shocked at how well you do financially over time. HBM
Cary Siegel is a retired business executive. After earning his MBA from the University of Chicago, he began his career in brand management with Kraft and went on to lead several companies in marketing and sales. He wrote “Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By,” whydidnttheyteachmethisinschool.com for his five teenage children. Following his personal money management principles allowed him to retire at the age of 45. Siegel is a popular speaker on both marketing and personal money management.