10 Personal Finance “Fortune” Cookies

Fortune cookies cannot guarantee that you will amass a fortune of wealth. Fortunately, though, there are steps you can take to put your finances on the right path (no matter how the cookie crumbles).

Here is our list of ten things to think about on your journey to financial independence:

1. Compounding is your best financial friend when you’re investing, and it is your worst financial enemy when you have credit-card debt.

• Earning interest on interest is great because that money is going into your pocket. Paying interest on interest is not great, because that money is going into the pocket of your credit-card company. (For more on compounding, see “Investing 101/Before You Invest/Starting to invest early.“)

2. Don’t put off saving for retirement just because it seems like a long way off.

• The longer you wait to begin saving for retirement, the more you’ll need to save every month to reach your retirement goals. 
• Time passes more quickly than you think. 
• Retirement may be a long way off, but saving for retirement will make you feel less stress now.

3. Develop a money-saving mindset.

• Paying yourself first and automating your savings really do work.
• Think carefully about where you spend your money and look for ways to save on those things that contribute to a happy life.
• Optimize your spending. It’s one of the keys to financial fitness and financial independence. It’s not about how much you earn but about how much you keep (and what you do with that).

4. Don’t let FOMO cause you to get into serious debt.

• Those tropical-beach photos or fancy meals that you see on your friend’s Instagram page might have been financed through a credit card (further sinking that person into debt).
• Don’t try to keep up with a facade (or the Jones’, as our parents said).
• Live your own life on your own terms. This means identifying and prioritizing what’s important to you (not your friends, your parents, others’ expectations…). What makes YOU happy and what are YOUR goals?

5. Don’t put off investing because it seems overwhelming. There is no perfect approach or perfect portfolio.

• If you wait for perfection, you’ll never take action.
• Do your due diligence, make an informed decision, and get started when you feel ready.
• Fear should not stop you. You are smart enough to understand this topic. It may have a new set of terms for you to get comfortable with, but it is not rocket science.

6. Consider the opportunity cost of spending choices.

• Substitute a less expensive option when you can (or give up something entirely) and invest the savings. 

7. Pay attention to your career and optimize your earnings potential.

• Keep your LinkedIn profile up-to-date.
• Update your resume periodically (at least quarterly).
• Network rabidly (but not like you have a condition). Good professional relationships and contacts are vital to your career. 
• People who switch jobs more frequently end up earning more over their entire careers than people who stay at the same job.
• For more details on managing your career, see here.

8. Read up on index funds, target date funds, and robo-advisors so you can make an informed decision about what approach might be best for you.

• With index funds, you’re not trying to beat the market. Index funds allow your investments to “be” the market.
• Target date retirement funds, which are based on your age and anticipated retirement date, allow you to sit back and let a fund manager rebalance and reallocate for you. 
• Robo-advisors are a low-cost hybrid between managed accounts and investing on your own. Check them out and decide if that’s the way to go for you.

9. Cook more at home and invest the savings.

• You’ll eat healthier food, learn new skills, bond more with friends and family, and save money at the same time.

10. Think for yourself, especially when it comes to investing. (No, we aren’t missing the not-so-subtle irony of this one, coming at the end of a list of things we’re telling you to do.)

• Advice is great, especially if it comes from someone (or something—see robos) reputable, knowledgeable, and experienced in this field. But at the end of the day, you need to make your own decisions based on all the information you’ve gathered (which may or may not include other people’s advice).
• Don’t let anyone pressure you into an investment decision. The gains or losses will be yours, and the decision needs to be yours.
• Don’t let your spouse or significant other handle all of the financial decisions. You are a part of the relationship, and you need to be a part of the financial decision-making. Insist on that. (Plus, your partner may not be there forever. You need to be involved in the decisions now so that you can protect yourself for your entire life.)
• The media may say the market’s going up or the market’s going down. They will be right half of the time. (Or 100% of the time if you just wait long enough.) Hear what they have to say and then draw your own conclusions.
• Nobody cares more about your personal financial situation than you do. That’s why you need to make your own decisions.
• If your brother-in-law’s boyfriend’s boss’ sister’s aunt made a lot of money on XYZ stock, that’s nice for that person. You can’t listen to what other people think or say about any particular investment or investment strategy. You have a good brain. Think for yourself.