Avoid Crowd-Guided Savings and Investment Approaches

You must safeguard your savings and investments from potential avoidable losses. Anyway, why would you sacrifice part of your earnings for all those five, ten or twenty years, only to end up losing them in that avoidable unscrupulous deal?

Today, there are unending wrong financial advises out there emanating from ‘financial experts’ whose education backgrounds and experiences lie in other fields. The truth is, most financial and investment institutions are more profit driven, rather than driven by a desire to give their clients value for their money. You must, therefore, listen to your instincts as you seek for any savings or investment advice.

That everyone in your office is excited and rushing towards investing in certain shares should not be an excuse for you to hurriedly invest in those shares without any sound financial or investment advice.

  1. Only get into debt you can afford

You’ve endlessly heard that you should never test the depth of a river with both feet. Do you think you can have a comfortable sleep, or be able to move around peacefully, knowing that you used your car, house, business, or some precious household item as a collateral to a credit facility you’ve defaulted on, with no possible signs of being able to pay up?

Naturally, borrowing money is a symbol of “incompleteness” and may turn you into a master (if someone owes you) or a slave (if you owe someone). It’s a two-edged sword. You must discipline yourself only to borrow money you can comfortably repay. Significantly, you should get into debt only when you are in need of purchasing items with appreciating values, or for viable business ventures.

For purchase of assets with non-increasing values, you should save towards acquiring them or purchase them from your income. You must learn to manage your appetite for taking more loans unnecessarily, as such might trap you into the bottomless pit of debt. Debt isn’t bad, but unplanned debt is like poison to a nicely prepared meal!

Spend more on items offering you savings on purchases

Why would you want to buy a new television set from a high-end retailer when your next door neighbor, who is relocating to another country is offering a similar one-month-old TV for sale at half the original price? Do you need to eat lunch every day at that hotel with a highly priced menu, while you have a fridge and a microwave in the office to help you cool and heat up that packed lunch from home? And why would you want to sleep out in that fancy hotel when your home/house is just a stone throw away? Why would you save to purchase a car if you have no urgent use of it? Why would you insist on purchasing it if you have no money to buy a motor cover, to fuel it, and or to service it?

Own your dwelling place

Own where you live or any amount you pay towards rent should be geared towards owning that house. Paying rent is a liability, but if the payment of that rent is geared towards owning that house someday, then that’s an asset. Owning your place of dwelling will not only offer you convenience, freedom, and peace of mind but will equally help you free that rent money to utilize it on other projects such as savings, investments and or on any emergent financial need.

Shun the company of negative financial influencers

Never be afraid of saying NO to unjustifiable financial solicitations, be it from friends, relatives or colleagues. A famous connotation goes; show me your bank account balance, and I will show you your friends. The world has conditioned us to “hang out” with people whom we fall in similar “classes” of life. We consequently end up having friends whose earning, and spending abilities are almost commensurate with ours. But there are some friends and colleagues who will always want to take advantage of your financial innocence, and exploit you to their advantage. They will, say, want to take you out to the best hotel around for lunch, but end up making you pay all the bills from that outing. They will want to lure you to purchase a personal car to take them out every weekend, while they purchase homes whose values keeps appreciating each month. While you are focused on pimping that car to match their taste, they, on the other hand, are working on acquiring a secondary house, or even a parcel of land somewhere.

Hang out with people who respect your wallet. Not those crafty scavengers who retire to bed while scheming on how to ‘extract’ money from you the next day. Avoid those night-club-thirsty brokes who have no single cent to even buying drinking water at that fancy night club they frequent courtesy of your wallet. Always remember that there are people who will only be around you when your life is filled with good fortunes, but you’ll never see them during your financially trying times.

  1. Never lend money you can’t afford to live without

Lending money to very close friends or relatives, especially to those people who can easily take advantage of your generosity usually has ugly endings. The truth is, it’s never easy as an individual to successfully recover money which has fallen in the hands of a wrong borrower. It’s, therefore, vital to learn six simple safety measures you can adopt to help you lend your money safely if you must. Here they are:

Only lend money you are willing to lose – If you are not willing to lose that money, don’t lend it to anyone. If you can’t live without that money, don’t give it out.

Establish the credit rating/credit score of the borrower – Technically, most individual lenders would want to shy away from taking this route, but in case you want to guarantee the safety of your money, you should ask the lender to provide you with his credit rating/score, obtained from a reputational credit reference bureau. This will help you establish if the borrower has any history of unpaid or defaulted payments.

Know the most vital details of the borrower -know where the borrower lives, his/her permanent home address, and some of his/her relatives, friends, and even family members you can contact in case he/she defaults on paying you back and is unreachable.

Ask for a guarantee or a guarantor – You can ask the borrower to provide you with collateral of a similar or more value for the borrowed amount or have a reputable individual act as a guarantor to the borrower. In the case of any trouble in payment or total default in payment, this will help you to know where to turn to.

Keep track of the borrower – You can occasionally call the borrower just to get to know how he/she is fairing on with life. You can equally occasionally call the guarantor, if any, to ascertain the well-being of the borrower.

And why not insure that money? – Practically, this might not be possible in several countries due to unavailability of relevant covers. Designing appropriate insurance covers for individual money lenders is an underwriting headache to many insurance companies. But if you come across such relevant insurance covers, which can shield you against losing the money you are lending, then never hesitate to grab such covers.

  1. Have an emergency kitty

An emergency kitty will always shield you from viewing credit as your safety net. And in the event of exposure to unavoidable life’s emergencies or tragedies such as sickness, job loss, or even death, you’ll always have somewhere to run to for financial help.

You may already have an emergency kitty and not even realize it. Find out more how you can take the structured settlement or annuity you currently have and cash it out. Yes, even if your settlement strictly states you cannot sell it, you can due to recent legislation that has past. Judges can now override “no sale clauses” in settlement agreements so you can pay the bills which are causing you severe stress.

  1. Take good care of your health

Most probably, you’ve heard that your health is your wealth. Go for those periodical checkups, eat healthy foods and on a diet, drink lots of water, often meditate, and do regular exercises. Do whatever you can to stay healthy all the time. And whatever strategies you adopt to help you acquire more money, ensure your health is never put at risk. After all, what would be the essence of acquiring all that wealth, only to lose your life the next morning on avoidable health-related grounds?

  1. Always give back

You will never lack by giving. As a sign of gratitude, always give something to those less fortunate members of the society who may never be in any position to pay you back. What special talent do you have? Can you find some time to mentor others? Use that unique gift you have to lift up or encourage someone else.  The biggest secret to being alive is in giving back.

Key Points

The thirteen financially healthy and highly rewarding habits you should adopt

  1. Live within your income
  2. Establish other sources of income, and even more
  3. Budget for every coin you earn
  4. Save and invest part of your earnings, that windfall, that per diem, and that bonus
  5. Avoid crowd-guided savings and investment approaches
  6. Only get into debt you can afford
  7. Spend more on items offering you savings on purchases
  8. Own your dwelling place
  9. Shun the company of negative financial influencers
  10. Never lend money you can’t afford to live without
  11. Have an emergency kitty
  12. Take good care of your health
  13. Always give back