10 Basic Financial Maxims (teach them to your children and you’ll both be thankful)*
- There is no such thing as a free lunch.
- Get paid what you are worth. Pay yourself first (save at least 10%). Spend less than you earn.
The essentials of life are relatively cheap. It’s only the luxuries that are expensive.
- The price of borrowing money is interest—and worry. Do not buy a depreciating asset with borrowed money. Keep all borrowing below the “worry point”.
- The purpose of insurance is to protect against financial disaster. Period.
- The return on your investment is not nearly as important as the return of your investment. If you don’t understand it, walk away.
- A bad product (or asset) is always a bad deal. A good product (or asset) is only a good deal if the price is right. Price is what you pay. Value is what you get.
- An investment in knowledge pays the best return.
- Don’t think of inflation as the price of money going up. Think of it as the value of money going down.
- Income and wealth are not the same. Income can stop abruptly and without warning. Expenses can exceed income. Only those with significant discretionary income are truly wealthy. Wealth is created by what is done with Income.
Bonus Quote: By failing to prepare, you are preparing to fail. Well done is better than well said.
— Benjamin Franklin