A couple of weeks back, we wrote about Eric Tyson‘s simple tips for improving your personal finance. Today, I wanted to follow up with a few more useful suggestions by Tyson.
1. Understand and Use Your Employee Benefits. If you are gainfully employed, you may have access to educational and retirement benefits. In some cases, the retirement benefits such as matching 401k contributions, can significantly improve your bottom line. Using your educational benefits can help improve your value to your employer or your quality of life. In short, taking advantage of any benefits your employer offers can help you.
2. Research Before You Buy. Don’t purchase financial products strictly on basis of advertisements or salesperson’s solicitations. This is good advice. My wife and I were in a Washington Mutual branch in Oregon a couple of years ago, and a saleslady tried to sell us an annuity with a 6% sales charge. Annuities typically are favorites for sales staff because they have generous fee structures. Because of their fees, they aren’t right for everybody. The main point here is you should research products before you buy them.
3. Avoid Financial Products That Carry High Commissions and Expenses. Firms that sell their products using aggressive sales techniques generally have the worst financial products and highest fees. Did you ever wonder why it is that you need to ask around to find great insurance providers or why its necessary to hit the books to find good stock picks? Generally speaking, you should consider having a healthy sense of skepticism when someone tries to sell you a “fee’d-up” financial product.
4. Don’t Buy a Financial Product You Don’t Understand. Instead of giving in and buying something you’re not familiar with, the best thing to do is ask questions and get informed. This may take some effort, but its probably worth it in the long run. The marginal improvement you can get from buying the right kind of insurance or mutual fund can really pay off over the long term.
5. Invest the Majority of Your Long-Term Money in Ownership Vehicles. Tyson says, and I strongly agree, that the bulk of your money should be put into investments that have ownership potential. This includes: real estate, stocks or your own business. Other types of investments such as bonds, or savings accounts may not give you the kind of return you need. This makes sense. In the past we’ve made money (like $30,000 or more) on stocks and real estate. Since nothing succeeds like success, I highly endorse Tyson’s last point here.
Best,
James
DINKS (Dual Income No Kids) Finance is a blog discussing personal finance for couples. While by no means financial experts, we own a variety of assets including real estate and stocks. We've both been up to our eyeballs in debt and have made tons of financial mistakes. However, we've both successfully retired that debt and we both do learn from our failings. We hope that our voice in this blog can help others in achieving their goals!
