To help you financially plan for your future, we asked CEOs and business leaders this question for their best insights. From the old viewpoint of not switching jobs to save money to saving only 10% of your earnings, there are several pieces of antiquated advice that we should now ignore when financially planning for the future.
Here are six pieces of financial advice that have changed in recent years:
- Changing a Job Isn’t Bad News for Your Wallet Anymore
- Instead of Saving Your Money, Invest It
- Stop Paying Yourself First
- Saving Money Isn’t a Bad Thing
- Don’t Use Pen and Paper to Do a Budget
- Saving 10% is No Longer Enough
Changing a Job Isn’t Bad News for Your Wallet Anymore
If you look back on what your parents and grandparents told you about their careers, you will no doubt find out that they didn’t have that many jobs. Your grandparents especially probably had one or two for most of their lives. Back then changing jobs didn’t help your wallet at all, but now it’s almost the opposite. Of course, switching jobs too often may lead to less than favorable offers, but changing jobs every two or three years is actually recommended should your expectations not be met. Don’t be afraid to change jobs, your wallet will likely appreciate it.
Marketing & Outreach Manager,
Instead of Saving Your Money, Invest It
It is a piece of wise advice that has been modified in recent days. Financial advisers are saying that you should save first before you spend. It must be a conscious act that one should do, regardless of the situation. In short, you must control the flow of your finances to ensure that you can stash off cash as savings. Another alternative is for you to invest rather than let your money sleep in slow-moving, low-interest savings. You can choose from available investment options. Know your profile as an investor. Study the choices offered to you. Investing is more of a sound financial move than savings.
Consultant and Content Writer,
Stop Paying Yourself First
Money can be a very scary item to plan around; one wrong move and you are in deep trouble. Planning for the future solely depends on the present situation and what you look forward to. If you are financially sound in the present, paying yourself does not seem a wise move. The best move is to ignore the idea of paying yourself since plans have your interest at their core.
Saving Money Isn’t a Bad Thing
Antiquated advice that we should ignore when financially planning for the future is the idea that saving money is a bad thing.
It’s easy to see why this myth has become so ingrained in our culture: save money, and you might miss out on all the fun stuff! But if you look at it from a purely financial perspective, it makes sense to save as much money as possible now and spend it later.
The reason for this is simple: spending money now is a lot more expensive than spending it later. If you have $10 and can buy a cup of coffee now, or invest it and have $20 in three years, which would you rather do? Even if they both cost $5 each time, you’ll pay more in interest if you borrow money instead of investing it.
So while it may be tempting to spend more money than necessary when you don’t have any saved up, try to resist the urge. Instead, put your money into an account that earns interest—like a savings account or certificate of deposit (CD)—and watch how quickly your balance grows!
Don’t Use Pen and Paper to Do a Budget
You need to be able to look at your budget every month, see how you’re doing, and be able to have the flexibility to make changes along the way. If you are using pen and paper, you’re going to have to start over every month and that’s where procrastination and laziness start to come into play. If you’re someone that’s not going to be as motivated to make changes, you can’t do it on paper. You need software that gives you some flexibility and a lot of insight. Even a simple Google spreadsheet that is free and easy to use would be enough.
That being said, when you’re doing your budget, you want to be realistic. Budgets are also about being realistic about what you can spend and what you can save. If you’re trying to save $100 per month on a $1,000 per month budget, you’re not going to be successful. So that’s where the flexibility comes in. You need to be able to see where you’re at and make those adjustments as you go.
Founder & CEO,
Saving 10% is No Longer Enough
Instead of adhering to the age-old adage of putting away 10% of your earnings into savings, people should now set aside 20-25% of their paycheck for savings, emergencies and taxes.
People should strive to maintain a rainy day fund from which they can pay living expenses for six months to a year. As we learned during the Great Recession of 2008-09 and the Covid-19 Pandemic beginning in 2020, events out of one’s control can lead to the loss of a job for an indefinite period of time.
Saving enough money to live on as well as pay taxes and other financial obligations for a year will help to ease the financial burden during unemployment, an illness or weather-related loss.
Founder & Attorney,
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