Each of the following wealth building, budgeting and investing tips comes direct from the brains of 20 different financial advisors across Canada and the United States.

Some great advice here:

  1. Spend less than you earn.
  2. Boring might not make you uber-wealthy, but it sure won’t make you poor. There are solutions for having too much money, but there aren’t many for having too little. You can’t manage your money until you can manage your behaviours and emotions about it.
  3. Stop obsessing about your investments. Buying and selling frequently is well proven to hurt your returns and it steals your attention from the other very important financial issues you need to be on top of. Investment advice is the tip of the proverbial iceberg when it comes to your personal finances. Managing your cash flow (e.g. budgeting), protecting your family against a catastrophe (e.g. insurance), creating instructions for what happens to your wealth when you die (e.g. estate planning), retirement planning, maximizing your work benefits and pension, etc. There’s a lot to get on top of. Thinking systematically about these things are covered in a financial plan. Go find an advice-only financial planner who can coach you through it (these are professionals who sell only their advice and do NOT get paid for selling you a financial product).
  4. Stay invested and don’t try to time the markets. Know the risk you’re willing to take. Do your research prior to investing, have a strategy and plan. Know your time horizon.
  5. When I bought my house, friends suggested that I spend money (~5-10k) every year on something – fixing the roof, adding a garden, upgrading the furnace or AC. That way I’d always be ahead of the ongoing repairs that a house requires. I could do maintenance stuff or something that would be fun for me. But I should do something. It served me very well over the many years I owned my house. Over the years I researched what added value and what didn’t which helped me make better decisions. Great advice from very good friends.
  6. Create a budget within your means based on what brings you deep meaning and joy. Then strategically redirect the wastage towards saving, debt, and investing.
  7. Slow, boring, and passive indexing wins the race over hype, complication, and risk.
  8. Make debt repayment mandatory like rent and you’ll get out of it much faster.
  9. Understanding and applying the principles of compounding, leverage (other people’s money), and assets will make you wealthy over the long term.
  10. Not sure you can afford that mortgage? Don’t have a down payment? Act like you have a mortgage. Put the money into a separate account or investment. The result is you prove you can pay the additional cost of a house over and above your current dwelling costs plus you contribute to your down payment.

    New to DumbWealth? Start here.

  11. Tell your money where to go with a proper budget instead of asking where it went when it’s gone.
  12. Maximize any and all workplace programs that match savings, offer shares at a discount or any other program that pay you to invest. It’s unbelievable how many people don’t take advantage of these programs that offer “free money”. And don’t underestimate their value when evaluating job offers or thinking about leaving an employer with great savings incentive programs.
  13. Don’t buy a new car, go used and never finance the purchase of a depreciating asset.
  14. Credit card balances carried over to the next month and the outrageous interest rates will make you poor or even bankrupt. My advice is to never put anything on a credit card that you cannot pay off in full the next month. Otherwise don’t buy it, you can’t afford it.
  15. Money comes last… your vision, your values and your goals must come first when designing a strategy for your future.
  16. Buy an umbrella when it’s sunny outside. In other words, buy insurance when you’re young and healthy because it will rain eventually.
  17. Don’t compare what you have to others – there’s a good chance their financial position isn’t as good as it appears.
  18. You will never become wealthy chasing a larger paycheck. True wealth will come only from wise investing over time – understanding the concept of compound interest and the impact inflation has on the future value of your money.
  19. Never purchase something if you can’t buy it 3 times.
  20. Give! Money is like water-it’s clean and refreshing when moving! Who wants to drink from a stale pond?

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2 Comments

  1. #4 Stay invested is the worse possible advice since the days of the shoeshine boy stock tips just before the 1929 stock market crash. There’s no surer way to lose everything than to stay invested.

    1. Individual investors fail to achieve market returns because they try to time the market. They are their own worst enemy. Best to stay invested. Even if someone bought at a market peak, over a long enough time horizon they’d come out ahead.

      And your comment “There’s no surer way to lose everything than to stay invested” is hyperbole. All your assets would have to go to zero for that to happen.

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