16 Simple Steps to Become Smarter About Your Money

Here are timeless truths about money and life.

First, just know this – you are richer than you think! And you don’t have to be rich to live rich.


Take these 16 truths everywhere you go. Print then and share them.

Ready? Let’s go.

1Always spend less than you make – your life will be much easier and less stressful.

2. Pay yourself first – at least an hour a day of your income – you’re going to work 90,000 hours over your lifetime you should keep at least an hour a day of your income.

3. Don’t budget – you’re too busy, and you will just get frustrated and fail–instead automate your financial life. When it’s automatic you can’t fail.

4. Be an investor, not a borrower – investors get rich borrowers stay poor.

5. Buy a home, don’t rent. Renters stay poor – homeowners and landlords build wealth.

6. Don’tlend money to friends or family (you will lose both) — and you’re not a bank.

7. Neverinvest in things you don’t understand. If the investment can’t be explained to you on one piece of paper it’s too complicated. Pass.

8. Invest for the long-term – building wealth takes decades not days. On average its two decades to get financially secure, three to four to be financially free. Want to get there faster? Double the one hour of savings rule – I gave you in rule #2.

9. Don’t try to time the market, it won’t work. Investors who time the market always fail.

10. Never invest on margin – leverage kills you when things go wrong.

11. This time is different — it’s never different. Things work until they don’t work. Never bet the farm, you can lose it.

12. Once you become rich — stay rich. It beats starting over (ask anyone who has had to).

13. Give back — because the more you give the more you grow – and you make the world a better place.

14. Nevergive up. No matter what happens, no matter how many times you fail as long as you get up and try again you haven’t lost.

15. Compoundinterest really is a miracle that works when you work it. Save $10 a day at 10% interest in 40 years you’ll have $1,897,244. Earn half of that and you’ll have close to half a million dollars. That will be way better than not having saved. Trust me. Your older self will thank you.

16. To find the money to save and invest you need to find your Latte Factor. The Latte Factor is the simple metaphor that will teach and inspire you to realize you are richer than you think and small amounts of money can change your life – if you invest it! Come check more at www.thelattefactor.com.

My brand new book can be read in an hour, its story that teaches this live changing metaphor and it can help you realize that you are richer than think – and you don’t have to be rich to live rich! AND come check out our brand new podcast we launched today to celebrate this on Quora. It’s called The Latte Factor Podcast and it has the first three chapters of the book on audio for free at www.thelattefactor.com. There are 8 episodes now loaded up for you to enjoy.

And before we go to the next question…

THE LATTE FACTOR MATH…let’s play a game.

Don’t go to Starbucks today for coffee/latte etc. Make the coffee at home for 20 cents and save $5.00 Invest $5 a day for 40 years @10% and you’ll have $948,611 in savings in your retirement account. Do it in a Roth and you’ll have that money tax free.

But wait a minute. What about inflation? You’re telling me that I will have $948,611 in a forty years – that won’t be worth much then. My answer to that – it will be worth a whole lot more than zero which is what most people who are not saving are going to have in forty years

But wait a minute. I can’t earn 10% on my money. Really? Who told you that. Large Company stocks have earned over 10% annually with reinvested dividends since 1926. Small company stocks have earned over 12%. The fact is that investing works when you work it. You have to be in it to win it. And if you truly don’t want to take risk and believe you can only earn 5%, you will still end up with hundreds of thousands in savings.

Okay but really $5 a day doesn’t seem like enough to save and invest. You’re totally right – it’s not enough. You should save and invest more.

Originally published on Quora.

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