Why Didn't They Teach Me This in School
Hello everyone today I am going to review the personal financial book Why Didn't They Teach Me This in School?-99
Personal Money Management Principles to Live By written by CARY SIEGEL
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| why didn't they teach me this in school book |
Here the author has given 99 personal financial rules to follow to have a good financial life. The book has been divided into 8 parts (i.e. life lesson, budgeting and saving lesson, spending lesson, debt and credit card lesson, investing lesson, housing lesson, insurance lesson and quick tips). I will be following the same order, so let’s get started. In my opinion this the book is for every beginner.
Financial life lessons
Here the author give you an approach to have toward the life that will help you to get financially strong.
Author suggests to marry someone who has good financial habit and also to get to know your partner financially well because if you can’t afford something while dating, you won’t be able to afford it after marriage. Once you have married financially good person you should stay married because divorce is one of the many reason that can hamper you financially.
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| Marry financially correct person |
When we talk about marriage the second thought is about children, but raising children causes significant expense that you and your spouse need to consider to manage things properly.
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| Cost raising children is significant |
One should live below mean (i.e. person should wait until they can afford thing that they want to buy). It will help you save money and give you peace of mind of not being under debt.
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| Debt free |
Cost of maintenance is always less than cost of not maintaining your stuffs. As the proverb say’s stitch in time saves nine.
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| Maintenance |
Friends makes our life better not only emotionally but also financially, because most of the quality financial advise comes from them. So it is of utmost importance to make friends and being in touch associates.
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| friends and associates give good financial advise |
We learn a lot from our 1st job there actually company is investing in our skill. So it will not be wrong to say that company is paying you to learn, so you should try to get most out of it.
You all will agree with me that, we are blessed with this information age everything you want is at your finger tip. So if just take 1 hour a week on learning about personal finance things will start improving and no matter how busy you are 1 hour a week is not a big deal.
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| Improving financial knowledge |
I have seen many people getting rich. One thing that I found common in their case was that journey of wealth is a slow journey for most of the people. So enjoy the journey and if you do it properly you will not only get money but also sweet memories and experience.
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| Getting rich is slow journey |
This one step- of
choosing a goal and sticking to it- changes everything
-SCOTT REED
Goal are important in everyones life because they give direction to your life. Short term and long term goal both are important. As and when your learn different thing your goal will keep on changing, but one must relentlessly keep on setting them. but just make sure your goals are realistic.
We all have our net worth, but very few are aware of it. You can calculate your net worth buy deducting liabilities from your asset (subtracting what you owe from what you own)
Budgeting and Savings lesson
Written budget is very important, as it will help you to analyze and tract your money which in turn will lead to good fiscal management. The basic principle is that more money should come in that it goes out.
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| More income in than out |
Saving 50% of every salary increase and 90% of every bonus requires discipline but it surely will help you to build a handsome amount in your saving account.
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| Savings |
Be aware of your companies employee benefits policies it include health insurance, vacation, short and long term disability, stock options, bonus plan etc. summed up together it will save lot of money.
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| Employee benefits policies |
Having an emergency fund and growing it slowly is useful in both good and bad time. No one knows what will happen in future. If something good happen you can use that fund to celebrate, but if you have problem in your life that fund will surely reduce your problem.
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| Grow your emergency fund |
Someone has rightfully said that one should be shameless while dealing with money. Make a habit of shopping around discount and making use of coupons will save you a lot. I know it sound cheap, but being financial strong will eventually make you a respectful.
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| Shopping around discount and coupons |
And last but not least is having a saving mind set versus spending mindset.
Spending Lessons
Today I will be discussing spending tips that can save you a substantial amount over time
You must have heard the saying that people buy emotionally and justify it logically, most of the time your intention to buy something come from your urge to keep up with the expensive lifestyle of your neighbor. And the same thing goes for your neighbor who is trying to keep up with your next neighbor.
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| Control the urge for expensive life style |
getting over this urge
and focusing on spending on your needs rather than on your want will greatly
help you financially and save you a lot in future. One way to do this is to
determine the everyday products and services that are important to you as it
will help you to prioritize your spending. The same thing goes for your
luxuries buy luxury that are important to you .i.e. don't buy luxuries for the
sake of having it.
Everyone wants to own expensive stuff but before buying anything expensive wait and think that do you really require it will you be still be using it after 1 month. The point is you should avoid impulse purchase of expensive things.
We all have unhealthy
habits that is having junk food cigarettes and beer etc. just try to calculate
the amount that you are spending on your unhealthy habit annually you
will be shocked by the amount that you could have saved by getting over
your on healthy habits.
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| Bad habit are bad for financial health also |
It’s easy to avoid your bills from growing too much by taking few simple actions.
1. be properly aware
of your bills .i.e. be aware of how much you are charged for the particular
service.
2. Whenever your cell
phone internet Cable Company increased their charges, call their
customer care department and ask for a valid reason for increasing
charges. And if it doesn't satisfy you say no to them.
3. While calling in the
above rule make sure your talking to the decision making person, a
manager or a senior employee.
4. While dealing with
Healthcare bills just enquire whether your insurance already covered the
bill amount. for else you will end up paying extra.
5. And last but not least
pay your bills on time every single month
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| Negotiate |
Debt and Credit Card Lesson
You should never get yourself into debt. The main focus should be
on living debt free life. Although you will come across many credit card
company, investment bank, local banks and others in financial industry who says
that debt is good, but remember they earn by the interest you pay on money you
received as loan from them. so don’t believe them.
If you are in debt make plans to get out of it. Few tips to get out of debt are
- Reduce your spending.
- Say no to credit card use only cash and debit card. Just have one credit card to use in case of emergency.
- Determine how much you owe to whom. Find the principle amount you owe and interest that you are paying on it.
- Pay off the highest interest rates and smallest debts first.
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| Increase savings |
Try to be credit card free. Have only one credit card to use just in case of emergence. This philosophy of buying now and paying later and trying to get everything now has taken over many peoples mind. when you buy things on cash you realize the expense, but with credit card you procrastinate and debt keep on increasing.
If you have 1 credit card pay the bill every month.it will require discipline.
Credit rating depends on timely payment of bill of mortgage, rent, utilities, service bills, and, of course, credit cards. And having a good credit card rating will help you in number of areas like securing loan, getting job, renting a apartment and getting favorable interest rate. So develop and maintain good credit rating.
Understand the interest rate, how much you can earn on your money and how much you pay on borrowed money. You will realize that the interest return you get on your money is always less that that you are charged on loan. So it seems a good idea to stay away from debt and wisely invest your savings.
Investing Lessons
You will get many advise to get an financial expert to guide you to invest. But not many financial expert beat the market so why should you pay for nothing. Managing your own money is what you should be doing, because nobody will care about your money as much as you care.
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| Investing |
Hoping that you all want to get financially better you must have come across some kind of get rich scheme. The scheme sounds got but if there was a way to get rich quickly why would anyone be poor. So when you hear about any get rich scheme (pyramid scheme, work from home and make million promise) stay away from it, remember there is no substitute for hard work and smart work.
We all heard about the investor who had a onetime big hit that changed his life or the lottery winner. But such home run is very rare and that happen to one in one million people. So don’t focus on hitting one time home run but on consistent singles and doubles. If you see most of millionaires you will realize that small consistent success lead then to what they are now.
Don’t put all your eggs in one basket, you must have heard it from many investor. It means you should have a diversified investment portfolio. This will reduce your risk of losing all your money if a particular stock comes down.
Investing in stock market require discipline to succeed, by this I mean one should have certain rule to bide by for long run success. Some of which are
- Don’t invest just because you have hunch that some stock will go up. Do proper research.
- Don’t follow your friends or associates advice without proper research.
- Don’t invest with family or friends
For beginner who don’t have much knowledge about stock market, start with mutual fund. Learn about stock market takes time sometime years. Mutual fund is where there a professional fund manager who takes your money and invests in different stocks and gives you good return so you don’t miss the opportunity.
Housing Lessons
for youngster who are just starting with their career buying house on loan is a bad idea as it will add to additional expense like maintenance , mortgage etc. if you are settled and comfortable with the long term prospect of your job or if you can afford buying home without loan then you can think of buying one. But if you are single and just starting with your career renting is the best option.
When you are looking for home to rent. the parameter to decide whether you can afford it or not is that its rent should be around 25% of your salary. Doing this adjustment will allow you to adjust other expense also.
If you have given one month’s rent as security deposit, don’t pay last month’s rent. Some land lord doesn’t give the deposite back and you will have to sue them to get your money but that also require money.
Remember the life lesson of living below your mean, it can be applied here also. Buy house less than you can afford. The extra money can be savings or be invested. If you do this you will be buying house in cash or limited down payment.
While looking for house there are number of consideration to look for. Major of than been location and price
Location
- Neighborhood safety and security
- Proximity to work, shopping, restaurants and school
- Quality of school
- Traffic
Price
- Current market price
- Appreciation potential
- Use effective negotiation
If you decide to buy house on loan your down payment should be at least 20% of the purchase price.the logic is simple the larger your down payment is the less will be you monthly payment, and it will be easy for you to pay for your home.
And few tips related to mortgage
- You mortgage + taxes should be less than 28% it will help to avoid trap of buying more home than you can afford.
- Search for low interest rate. It will require you to do some research, but it you a lot of money.
Insurance Lesson
Everyone should have insurance on home and automobile, because if you don’t have insurance you could lose everything you have. Just make sure that you are not paying high premium and also you should go for high deductible. Higher the deductible lower the premium and it doesn’t make sense to claim insurance for small damages.
If you are living as tenant do buy renter’s insurance to protect you personal property. Your landlord’s building insurance doesn’t include your personal property. Renter’s insurance is inexpensive you may never use it but if anything happen it will be of use.
Almost most everyone in their life time get hospitalized and the cost over there goes in six figure. So its always best to get a health insurance. If your job provides one make sure you take advantage of it.
There are types of insurance and one might get confused which one to get. Expecting that you all are young adult term insurance might work best for you. Term insurance insures your life for a specific time period (5yrs, 10yrs, 15 or 30yrs). And term insurance are cheaper the younger you are and also its maximizes your coverage for minimal cost.
Quick Tips
Don’t spend too much on your wedding, wedding if only for few days but using that money wise can build your future and your future. You can have a memorable wedding at low cost. If someone is paying for your wedding ask for money instead (kindly).
‘Multilevel marketing’ we all have been approached by our friends regarding the ground breaking scheme to get rich. Surely multilevel marketing offers success but it is for only few people for majority of people it’s a waste of time and loss of friendship. So stay away from it.
Do not keep on buying new car every 3 years or so. Drive your car till it’s safe to do so, it will save you a lot.
Read your automobile manual carefully there are valuable information like tire pressure, oil change etc. which if you follow will reduce you maintenance cost.
While buying drugs and grocery go for generic variety and similarly don’t buy the first generation of the products (TV, mobile etc) go for 2nd or 3rd generation.
Buy a good fire proof safe. It will keep all your documents (certificates, contracts, tax record, and insurance policies. Home and car title ) safe.
Have a good filing system to keep record of bills, receipt, statement or other things.
Always read carefully before you sign any contract.
At some point in your life you will come across a situation where you will have the right sue someone. Unless you have good reason or significant financial gain, avoid the law suits. Because suing someone rarely make financial sense.
Hire a good accountant. Because it help you to grow by maximizing your before tax money and suggesting strategies to reduce tax.
Conclusion
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