Key Principles

Golden Rule:  Live beneath your means.

This is the #1 rule to achieve personal financial success.  If you only follow one rule, this would be the one.  Whether you make $30,000 or $300,000 per year, you will not accumulate wealth if you spend at or above your income.  If the person making $30,000 saves 10% per year, but the person making $300,000 saves nothing, the person making $30,000 will accumulate wealth and the other will not.

Pay yourself first.

Create a list of routine bills each month and their typical due dates.  For example, 10th of the month is your internet services, 12th of the month is your mortgage payment, 15th of the month is your utility bill, etc.  Now put the first bill due every month on the 1st being your name.  This is the bill to pay yourself.  This means to put money aside right away for your future before you pay others.  This will make sure you save.  Even better would be to have your employer withhold the funds from your paycheck and send to your investment account. 

Always comparison shop.

Doesn’t matter what it is (mortgage loans, cars, any item, any service, etc).  You need multiple data points to get the best deal.  If you are not willing to do this (you just take the first deal) you will always pay more over time than someone who routinely gets 2 or 3 quotes.  Make it a habit to always check three prices of an item or service you want to buy to make sure you are getting the best deal.

Understand the other side of any business deal.

If you understand why the other side wants to make a deal, you will be in the best position to know if it is a legit reasonable deal, a bad deal, or a scam.  Ask yourself, how are they making money?  Does it make sense how they are making money?  Once you understand that you should be able to assess the deal objectively.  If you don’t understand how they make money, you should avoid doing business with them to protect yourself.

A long term focus is always best.

Last minute rush decisions are almost always worse because you don’t have the time to think through all the options or position yourself in the best possible light.  For example, if you are in a rush to buy something right now because you didn’t plan ahead or because you can’t wait, you will almost always pay more.  If you make investment decisions based on what is happening this week rather than having a long term focus of years, you will almost always make reactive moves rather than proactive moves.

Welcome To SmartMoneyToolBox

Hi, my name is John. I am a CPA who has worked in both public accounting and private industry since my career began in 1990. Building financial security is a marathon - not a sprint. It’s not a get rich quick formula. If you provide the effort, SmartMoneyToolbox will supply the tools!

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