Most of the best maxims have been around since well before the advent of modern era of internet banking and pushed by our grand parents and our great grand parents before them. Do they still hold true? Is the old wisdom still relevant in these modern times?
Here is our analysis of some tried and tested money sayings:
“Save for a rainy day money”
You can’t go wrong with this old saying. You absolutely need to have money set aside for contingencies. Always ensure you have some cash that’s easily accessible on short notice. If you’re sick or injured, even if you have income protection insurance, there’s usually a 30-day wait period. Think of some of the other factors like the cost of flights if you have family interstate or overseas and need a speedy trip home.
“Buy low, sell high”
This is an absolute foundation for investing and tends to get lost when there is blood on the floor when the markets go pear shaped and head south. Following this rule will prevent you from getting caught up in the investor sentiment pendulum, where panic can rule your financial decisions with a negative outcome. Do like Warren Buffet: “sell when everyone is greedy and buy when everyone is fearful”.
“You have to spend money to save money”
It may seem counterintuitive, but this saying can help your bank account in a number of different ways. First of all, buying things during sale time is a way of spending money but ultimately saving. Why pay retail when you can pay wholesale?
This only holds true only if you’re buying something you really need. The same goes for buying crucial everyday items in bulk, as well as investing in quality wardrobe pieces that will last longer than trendier items.
If you own your own home you need to spend money on maintenance so it stays in good condition. This applies to getting regular services for your car or going to the dentist or doctor for an annual medical as well.
It also pays to splurge on good advice, whether that is financial advice or more specified guidance when making a big life decision.
“There is no such thing as a free lunch”
Sadly, this saying will last forever. If it seems too good to be true, it probably is. Know the fees, the costs and be aware there’s no quick fix for anything. If there appears to be several perks involved in an investment, consider that the price of these perks may have already been built into the final price.
“A penny saved is a penny earned”
We see this one in regards to your mortgage. Every dollar you put into your mortgage, you’re saving yourself interest and a little bit closer to being debt free. This also applies to paying off your credit card and any other debt you have accumulated will save you the cost of interest in the long run.
“Look after the cents and the dollars will look after themselves”
The discipline to manage even the smallest amount of cash is an invaluable way to learn about money. How you invest one hundred million dollars is the same as how you invest $1,000. Don’t pay unnecessary fees, do your research and pay for good financial advice.
“Pay yourself first”
This can be interpreted as a good excuse to finally set up a direct deposit into your savings account every time your pay comes through. We see it in a “treat yourself” light. Instead of paying all your bills and seeing what’s left, put 10% of what you earn into a special account, for something you’re passionate about. You work hard, so give back to you. Remember that life is too short to have regrets!
“It takes money to make money”
This is an urban myth because if you’re just saving you’re still making money in a way. If you have nothing behind you, it’s very hard to start investing. People who are wealthier can also afford to take more risks because the impact of losing money is less. Investing in a great education will put you in good stead for future career prospects.