If you go to college to study business, you will gain sufficient knowledge, skills and expertise about financial markets. It will make it easier for you to make responsible financial decisions.
You will learn that some financial products are less risky (e.g. certificates of deposit, saving accounts, federal or municipal bonds, etc.) while some other financial products are riskier. The risk might be caused by future uncertainty (e.g. stock market fluctuations, corporate bonds failures of lousy companies, etc.), or because of you failing on regular repayments of debt with high interest rates (e.g. credit cards, consumer loans, etc.).
Buying highly risky financial instruments can make your financial situation worse. Or, even bankrupt your entire household, if you do not have sufficient knowledge.
While I will write about investing on the stock market, in bonds or mutual funds, buying the best insurance and handling legal issues such as TAXes and foreclosures, I am neither a corporate lawyer nor financial advisor. Therefore, my articles should always be considered as of a friendly nature rather than a professional recommendation.
I try to focus on truly helping people to improve their financial acumen. Especially, when it comes to saving money and managing family budgets, so we can all live higher quality live thanks to having better financial situation.
Your own financial decisions
Here is a list of financial decisions that I will never make for someone else. So, if you plan to venture into some of those financial instruments, you will need to decide on your own whether it is worth it.
1. Choose the credit card
I definitely will not help you to choose a credit card. There are many people who own credit cards and use them irresponsibly. Those will be drowning in heavy debt sooner than later. Credit cards are one of the most expensive loans on the market (interest rates on debt as high as 20% annually) with dozens of high fees for late payments. Wherever you go, the current world is spinning around overwhelming consumerism spiced up by mass media. Careless ownership of the credit card gets many people into serious debt because they simply cannot resist immediate urges to buy more and more stuff.
That is why the best way to always stay debt-free is to spend less money than you earn. And you definitely do not need a credit card for that. How to check whether you can afford something or not? If you have enough cash in your current bank account, inside a money pig, in your wallet, or even hidden somewhere in the sock under the bed, no worries, you can afford stuff.
My TIP: If you need to own a credit card, first, learn how credit cards work.
2. Figure out how to pay for products you cannot afford
I am a huge fan of ‘debt-free mentality’, which means never going into debt no matter how messed up things are. So, if you are tempted by various advertising to buy yourself a nice pair of new jeans using borrowed money, and you wonder whether everything with your finance will be OK, you are wrong. Most likely you will not be able to pay it back when that debt comes due. You may need the money later when some unexpected events happen in your life, e.g. you are being laid off, getting sick, your car breaking down, etc.
My TIP: Do not buy products you do not need using borrowed money.
3. Decide on a mortgage for buying property
Even though a home mortgage for buying a house or an apartment is the only commercial loan I consider worth-taking at any stage of life, my wife and I bought our apartment all in cash.
We were saving money for years to buy our home. We were fully aware that no matter how much our mortgage would be, we would always have to pay back to the bank roughly twice as much as we had borrowed. I am not interested in working for someone else (the bank) for the next 30 years of my life just because I have a huge mortgage to pay. Being financially free is simply more valuable to me.
More knowledge about BORROWING money will be published at this website at some point in the future.
My TIP: The 10-year or the 20-year home mortgage is cheaper than for longer haul such as the 30-year mortgage. Meaning, the shorter the mortgage period is, the less interest you will have to return to the bank for lending you the money.
4. Invest in public limited companies
I have learned the basics about the stock market investing when I was studying business journalism in the graduate school at Tsinghua University.
At that time, I took several business writing and business editing courses taught by professors from Bloomberg and Thomson Reuters, two world’s largest news agencies in the world. These courses have given me fundamental knowledge about stocks and bonds, Forex and Futures markets, so I could write financial market articles. Hence, my basic knowledge about what Wall Street is all about, how trading stocks works, where I should search for business information, how to look behind the numbers sweetened by the Public Relations people, etc.
However, I am not a professional trader, seasoned investor or an asset manager. Nor I follow stocks every day (I do from time to time). At least, not yet. At the moment, investing on the stock exchange is still too risky for me. There are two reasons why I am not buying stocks of publicly traded companies yet. Firstly, I am still investing in bank deposits to develop my second passive income stream. And secondly, because I still do not have sufficient knowledge in the area of buying marketable securities. I am fully aware that wrong investments can seriously hurt personal finance of my family.
But, I am not saying ‘No!’ to investing in public companies whatsoever. Investing in stocks is going to be my fourth passive income stream. I will perhaps start buying first shares in early 2023, once I am done with bank deposits. You can learn more about My Different Types of Income and other passive income streams in the latest Monthly Summary: October 2021.
My TIP: If you ask me today which stocks you should buy, I would always come up with the same list of great businesses to invest in.
5. Choose the best insurance
When growing up in Eastern Europe, I have always bought the cheapest car insurance available on the market. I got my car insurance from the biggest insurer though. It is because small insurance companies go bankrupt more often. And, you may end up covering the damage from your own pocket. The biggest insurers can also offer you the highest discounts.
Regarding health insurance for me and my family members, I have it covered by the current company that I work for. One day, I will write more about details about our health insurance plan which is pretty good.
But, is it worth spending a lot of money on life insurance? According to statistics, accidental death only happens to less than 5% of the population. So, I would recommend to rather save some money in ‘a medical fund’ to offset the cost of buying medications when any of my family members get sick.
There is not much that I know about INSURANCE and how the insurance market works, so there is lots to learn.
My TIP: n/a
6. Solve your legal issues
The thing with solving legal problems is pretty much the same as with the real estate market – the law is different in every country. And, I am not a lawyer.
So, I am unable to help you with solving your problems regarding TAXes, unfortunate foreclosures or other legal issues. Sorry!
My TIP: n/a
7. Decide to start saving money
I am willing to do a lot for you. I motivate you to start saving. I have already given you over hundreds of ways how to save money every day. I show you how I save money. But, the decision to start saving must be your own. You must be fully aware what you are signing up for. No matter, if you decide to save just for a week, or continue saving for the next 50 years.
My TIP: I describe the best saving practices in the SAVING section of this website.
To sum up this article, I try not to write about personal finance topics that I am not familiar with. And, I do not really deal with things which are unreasonable, e.g. maxing up five credit cards in one month, taking various Christmas loans to buy useless stuff, buying unaffordable things that have no value, etc. These actions do not really help people to live better life in the future.
Instead, I focus on sharing experiences related to family finance, recommending great money-saving tips which really work or helping to make mindful decisions. These good practices will make you and your loved ones financially safe and truly happy in the long-term.
