#2 Bank with multiple entities
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1. Always have cash on hand
Let’s say you lose access to all of your accounts. If you have cash on hand, it doesn’t eliminate the significant inconvenience but can offer a little relief (even if only minor).
2. Bank with multiple entities
If you lose access to your one bank, you’re screwed unless you have cash on hand, but will it be enough cash to carry you over?
When you bank with multiple entities, you diversify the protection of your assets.
3. Maintain multiple credit cards
I can’t count how many times I’ve traveled internationally and had one of my credit cards declined or became frozen.
Maintain more than one credit card (unless you routinely mismanage your credit cards; in that case, having no credit cards is likely the best option for you) to prevent losing access to credit when you need it most.
Always have a backup.
4. Keep your house payment 10–15% (or lower) of your net income
The standard advice is to keep your mortgage payment around 30% of your gross income. Shield yourself from having to manage an oversized mortgage payment by limiting your mortgage to around 10–15% of your net income. You will be able to save more, avoid purchasing too much house, and maintain lower stress levels.
5. Don’t take financial advice from friends and family if they aren’t succeeding financially
Your friends and family should hopefully have the best intentions for you, but it doesn’t mean their intentions are educated.
The best people to take financial advice from are the ones who know what they’re doing, are educated in the space, and aren’t looking to gain anything from you. But even with these people, you still need to practice due diligence, which requires you to be educated.
You can still learn from people who are broke or have a broken mindset; you can learn from them what not to do and what to avoid to prevent you from making similar mistakes.
6. Do your due diligence on every investment deal - even if it’s coming from a trustworthy friend or family member
If there is anything I learned from investing, it is to do your due diligence. There will always be plenty of opportunities to invest, but that doesn’t mean you should invest in every one of them. People lose money every day that they don’t have to because they don’t do their due diligence.
Whether the deal is coming from a friend, family member, trusted colleague, or person with a trustworthy track record, do your due diligence. Be indiscriminate and consistent with your due diligence, and never unquestioningly trust a person or deal with your money.
7. Live with significantly few things
Accumulation is a common habit for most, but it doesn’t mean you must adopt it. The less stuff you have, the more space you have and the less resources you release from your wealth.
You don’t need much. You really don’t. We need far less than we think. Instead of accumulating liabilities and temporary pleasures, focus on building assets and quality memories and experiences.
When you own fewer things, it’s easier to maneuver and make split decisions. I’ve been able to move multiple times at a record speed because of how little I own.
8. Commit to learning nonstop
For the past two weeks, I’ve been learning about a new area of personal finance, and I’m going to keep going for the next few months. The goal is to never stop learning about finance to elevate your options and wealth.
9. Eliminate emotion and use logic and data
When it comes to investing, you can’t get emotional. Emotion will lead to unnecessary losses and poor financial decisions. When facing a financial decision, use data to make logical financial decisions. The more logical financial decisions you make, the better off your finances will be.
10. Do the opposite of most people
If you analyze most finances, you will notice a few things they all share.
The average person:
- Lives above their means.
- Can’t afford a $1,000 emergency expense.
- Spends their money on liabilities instead of assets.
- Doesn’t educate themselves consistently about money.
- Is behind on retirement or general savings and investing goals.
To produce better outcomes with your money, do the opposite of what most people do. It’s as simple as that.
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Don’t know where to start when it comes to investing? Start here
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.