We’re big proponents of diversifying the qualities that define good health. Healthy men are fit and free of harmful diseases, of course, but they’re also good husbands, boyfriends, fathers, bosses, and employees. Healthy men also manage their personal finances in healthy ways. And over the years, Men’s Health has shared essential advice from the top financial experts in the field to help you maximise your money. These are the 9 best money tips in Men’s Health history:
Figure Out Your Net Worth
Would you start a diet without knowing your weight? Of course not. So begin your financial planning by determining your net worth. It’s assets minus liabilities, or what you own minus what you owe. Simple enough but few people even approximate their net worth.
Save in Your Sleep
Instead of thinking about how much you’ll need to reach your goal, estimate the maximum amount you could possibly save each month, says Dr. Dan Ariely, author of Predictably Irrational and a professor of psychology and behavioural economics at Duke University. Then set up automatic payments from your paycheck toward your goal. If you find you need more spending cash during the month, you can always adjust—but in the meantime, you’re stashing dough toward the day Junior gets into university.
Take a Salary Cut
The cash you don’t see every month can only help you. “Our younger clients not only are not maxing out their retirement plans” says Scott Kahan, a certified financial planner in New York City, “but they’re not taking advantage of their employers’ matching funds—that’s free money.”
The tax benefits amount to free money as well. Don’t put less than 10 percent of your salary into your retirement plan each month. Because of the tax benefits, your take-home pay will drop by only 7 percent. That seems like a lot, but trust us, you’ll never miss it. And in 10 years, you’ll be giddy every time your statement arrives. Oh, if you’re under 30, put all your money in stocks. At 30, start drizzling in cash, bonds, and other safe investments.
Pick Your Investments
The key? Keep it simple. Few investors can beat the overall stock market by choosing individual stocks, so don’t bother trying. In fact, few Wall Streeters can beat the market for more than a few years in a row.
Try mutual funds that approximate the return of the total stock market. Total index funds keep you well-diversified among large, middle, and small-company stocks. They’re a solid, unexciting choice which means they’re perfect.’
Decide Whether to Rent or Own a Home
Divide your annual rent outlay into the purchase price of your prospective home. If the result is less than 15, then it’s cheaper for you to buy. If it exceeds 15 then renting makes more financial sense.
Limit Credit Cards
This seems obvious, but it’s so important for young people. College campuses are overrun with credit-card vendors, and they will try to lure you in. Big mistake. Using one card and paying it off every month is a good way to establish credit; nobody needs 24 different accounts.
“Credit-card debt should be viewed as poison,” says New York-based financial planner Gary Schatsky, “even if in small amounts. It’s one thing to splurge on an item you enjoy—but don’t add to the price by paying an additional 12 to 22 percent in interest.”
To Save Money: Make Fewer Withdrawals
Some men tend to toss receipts, use all their cash, and hit the ATM again and again, says Cheryl Sherrard, C.F.P., of Rinehart Wealth Management. Save your ATM receipts for a month, subtract 20 percent from the total, and use that as your budget for the next month.
Money talks don’t begin with marriage or even when you move in together. They should start before you move in together and before you walk down the aisle, and then continue as your lives change and finances change.
Find some entry points when you’re dating and getting serious, such as, “So, how do you manage to afford this huge loft on your physical-therapist salary?” Paying attention to how someone manages their money gives you a clue as to what kind of money match you’ll be. Been together 10 years and still arguing? Take on a new attitude: partners in money as well as partners in love.
Take the Long View
Finance professor Frank Partnoy, of the University of San Diego school of law, recommends a long-term strategy for retirement. Pick out about a dozen companies that sell products you know and understand, and research them. You’ll still be taking risks, but at least you’ll understand those risks. Buy the stocks and then forget about them. Research shows that investors tend to buy stocks when the prices are high and sell them when they’re low. That’s the fastest way to lose money in the market. “You need to resist the short-term temptation to buy and sell based on what’s hot and what’s not,” Partnoy says.