7 Classic Money Moves That Have Stood The Test of Time
Published Published October 20, 2020
People who are doing well money-wise leave clues as to how they got there. Sure, we can try the latest and greatest investment or “get rich” moneymaking system, but the simple fact is the tried and true classics are the best way to get (and stay) ahead.
Here are seven of our favorite money moves that are almost guaranteed to pay off over the long term.
Classic Money Move #1 – Start Saving Right Now
Yes, we know it’s boring. We know it takes a long time. We know other things pay more interest than the bank does. We don’t care. Every single person who has a little cushion in the bank is happy about it. Every-Single-One.
Start saving every single week. We don’t care if it’s $5. The old saying “pay yourself first” is the single best financial advice we can give. Saving does two things: it instills financial discipline in you, and yea, the account grows. Money in the bank gives you tremendous leverage in life. Start building it now.
Classic Money Move #2 – Your 401K
If your employer offers a 401K, definitely take advantage of it. There are several excellent reasons. First, it’s easy – it gets deducted right from your paycheck. Second, what you invest is not taxed until distribution. In other words, you get a tax break, PLUS money that would have went to tax instead earns more money. Third, your employer will usually match your contribution – hey, FREE MONEY.
You need not contribute the max (hey, you need money to live too), but even at the smallest contribution, having a 401k rolling along gives you a HUGE leg up over the years. You need retirement savings, and the 401k is one of the best ways to get that.
Classic Money Move #3 – Cut Your Expenses
Our #1 and #2 moves both involve putting money away. For many of you, the question is “where do I get that money?” Simple – start cutting your expenses. Start with your daily coffee out – trust us, you won’t miss it. Eating and drinking out are tremendous expenses for people – start cutting that down.
We know, that’s no fun. But seriously, if you’re like most people, you can probably find $100 a week that you can divert to savings / 401k without much pain. The good part is, once you start, it becomes addicting. Make a budget, stick to it, and start eliminating those “instant gratification” expenses that fade once they are over.
Classic Money Move #4 – Avoid Credit Card Debt
People doing well financially do NOT carry credit card balances. It’s as simple as that. The interest you pay is so high that it will eliminate any advantage these other moves give you.
We’re not saying never to use your credit card. We are saying stop carrying a balance.
If you’re really savvy, you can get a credit card with nice rewards, and then use it for everything, and pay the balance in full every month (no interest then). Basically, the credit card company is then paying YOU to use their card. Sweet!
Classic Money Move #5 – Buy a House
Home ownership is still one of the bedrocks of a sound financial life. There are a few reasons. The first is, a home’s value almost always appreciates, especially over the long term. They simply aren’t making any more land, so yea, supply and demand dictate it’s a good move.
Secondly, when you pay your mortgage, you are essentially paying yourself. Your home is an appreciating asset that you will own at the end of the term, so the money will come back to you. When you pay rent - POOF - ALL of that money is gone. Home ownership also opens many financial doors – the equity you build can be leveraged to make your life easier.
Classic Money Move #6 – The Stock Market
Whether through your 401K, and IRA, or just on your own, the stock market continues to be the best long-term investment. Now we’re not talking “playing” the market and buying and selling. We are talking about long-term investments. Whether you choose some of today’s biggest and best companies, or you invest in index funds (which we like for long term growth), the stock market cannot be beaten if you’re talking about a 20-30 year period.
PRO TIP: Think long term, and ignore daily / weekly / monthly fluctuations. If you must scratch the “big score” itch, keep a little cash handy for playing a hunch, but generally, think “blue-chips or indexes, and set it and forget it”.
Classic Money Move #7 – Take Advantage of Low Rates (both kinds of rates!)
The internet has made it very easy for the average person to leverage low rates. And we’re not just talking about interest rates, either. Sure, if you’re looking for a mortgage or to refinancing your house, shopping for the best rate is often a click away.
But we’re also talking about insurance rates and similar. The internet has made it very easy to compare rates side by side, and we feel you should be doing this at least every two to three years. You can do this for homeowners insurance, car insurance, and many other services.