Every month I get a number of advance copies of personal finance books.
Each includes tens of thousands of words that promise and occasionally deliver something new, even though wealth building, like losing weight, can be summed up in five words:
Spend less than you earn. Eat less than you burn. (Hey, that rhymes!)
Here are a number of one-sentence personal and business financial guidelines to keep you on track:
1. Only make investments you can explain to your kids.
(No, "Because Elon Musk is awesome!" doesn't count.)
As Warren Buffett says, "The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective."
That's also true where analyzing investments is concerned. Like a unique selling proposition (USP), if you can't explain it in a sentence or two, you haven't figured it out.
2. The best investment you can make is in yourself.
Spending time every day investing in yourself -- improving your skills, improving your connections, improving your health and fitness -- will produce better long-term results than any other investment you can make.
Plus, it's the one investment outcome you can almost totally control.
3. If you spend your money on things, you're left with the things, not the money.
And not only does the value immediately start to depreciate, so does the "joy" of the initial purchase. Those incredible, amazing, gotta-have-them shoes?
By next week, they're just shoes.
4. When you work for someone else, your income is always capped.
Work for someone else and yeah, you might get raises -- but you will never earn more than someone else thinks you're worth.
Start a business, and your income is limited only by you.
5. Saving $1 is like earning $3.
Ben Franklin was wrong. A penny saved isn't a penny earned. You have to earn more than one penny to be able to save one. Taxes eat up a third. So does the inevitable lifestyle expansion that naturally occurs when income increases.
Instead of trying to figure out how to make $3,000 more a year, find ways to save $1,000. It's not that hard. Be a cable TV cord-cutter. Make your morning coffee at home instead of hitting Starbucks. Take your lunch to work a couple of times a week.
That's a thousand bucks right there.
And don't say you "deserve" certain things. What you really deserve, and what will make you much happier, is to not constantly worry about money.
6. Not maxing out the employer 401(k) match is giving away free money.
Make sure you contribute whatever it takes to max out what your employer will match. Otherwise you're saying, "Nah, I don't want your money. You keep it."
The same is true if you own your own business -- especially if you're the only employee. Set up a 401(k) and match 100 percent of your contributions. That way you're contributing pre-tax dollars, and so is your company.
As an employee you can contribute $18,500 to a 401(k) in 2018 ($24,500 if you're over 50), and total contributions (employer match, profit sharing) can add up to $55,000. That's a lot of money you can sock away.
Which is yet another reason to start your own business.
(Keep in mind that if you have employees you must extend the same match level to them as you do to yourself.)
7. No one cares about your money -- and your future -- as much as you do.
Especially not financial advisers. The nature of the business means they care more about making money from you, not for you.
The best person to look out for your interests is always -- always -- you.
8. Borrowing money takes minutes; paying it back seemingly takes forever.
If you have good credit and sufficient income, you can borrow 100 grand and go to a dealership and buy a Porsche. If you have no credit and no income, you can borrow 100 or even 200 grand and go to a private college and buy a degree.
But then you have to pay all that money back.
Borrowing money is an investment that should always provide a return. The return is not the thing, though -- it's the benefit from that thing. If you're scrambling every month to make your student loan payment on a teacher's salary -- and you will for the next 20 years, was the investment a good one? Maybe not.
Don't think about how long it takes to get a loan; think about how long it takes to pay it back, and the impact on your day-to-day life for all the years it takes.
That's the real cost of investment.
And speaking of loans...
9. Never borrow as much as a mortgage broker will lend you.
While the front-end and back-end ratios have definitely tightened, a mortgage broker will always lend you more money than you can really afford.
As with many things in life, just because you can doesn't mean you should.
And last but absolutely not least...
10. It's your life, so live it your way.
Some of the time it pays to consider what other people think -- but not if it stands in the way of living the life you really want to live.
Don't buy a particular car to impress other people; buy the car that's right for you. Don't buy a particular house to impress other people; buy the house that's right for you.
Make spending choices that are right for you. Make investment choices that are right for you. Pick your career, your school, your business -- everything -- because it's right for you.
Not only will you make better decisions about personal finance, you'll also be a lot happier, because you'll be living the life you want to lead.
And isn't that what money is really for?