Financial experts offer widely varying advice, though some will have similar tips or suggestions. With so much advice floating around, deciding who to listen to can be tricky. Depending on your financial situation and goals, you may find that one person’s advice suits you better than another’s.
So, then, which money expert should you listen to and when? It all depends, but you might find it best to heed several experts — while figuring out what works best for you.
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Money expert Dave Ramsey frequently discusses the importance of paying down debt and building financial security. In fact, his 7 Baby Steps are all about taking back control of your money. If you’re just starting out, or you find yourself struggling with debt, he may be worth listening to. His advice can also work even if you’re already somewhat financially established and are planning for retirement or building wealth.
Here’s an outline of the baby steps:
Build a starter emergency fund of $1,000.
Us the debt snowball method to pay off all debt, aside from your house — pay off the smallest balance first and build from there.
Keep saving for your emergency fund until you have three to six months’ worth of expenses set aside.
Start investing 15% of your household income for retirement purposes.
Save for your kids’ college education (if relevant).
Suze Orman started out as a waitress making around $400 a month, but she’s worked her way up to an estimated $75 million net worth. If you’re looking for advice from someone who’s been on both ends of the financial spectrum, you might want to follow some of Orman’s advice.
Among other things, here are some of her top lessons for those trying to work their way up:
Live below your means (but within your needs).
Buy rather than lease a car so you can eventually pay it off.
Don’t pay more for minor conveniences like food delivery, car leases or cafes.
Use debit rather than credit to avoid debt and excessive interest charges.
If you’re at a point in your life where you can save a substantial amount of your income, but you want to take your money even further, consider listening to Grant Cardone. His 40/40/20 rule in particular is all about building wealth.
As a rough guide, 40% of your gross income should be set aside for taxes. Another 40% should be saved. And the final 20% should be how much you actually spend. This maximizes savings and investing and minimizes frivolous spending.
The way this rule works is:
Earn as much as possible.
Save as much as possible.
Invest as much as possible in income-producing assets.
Take the profits from those investments and reinvest them into more income-producing assets to continually scale your wealth.
In an interview with GOBankingRates, Cardone said, “If you would save 40% of your gross revenue and use that to invest — not to live — I guarantee you’ll create wealth for yourself.”
Are you thinking about investing? And are you at a point where you can invest for the long haul? If so, Warren Buffett might be just the person to listen to.
One of Buffett’s well-known quotes is this: “The first rule of an investment is: Don’t lose [money]. And the second rule of an investment is: Don’t forget the first rule. And that’s all the rules there are.”
Buffett is all about value investing for the long term. He’s been known to hold onto company shares for years or decades at a time, something that’s allowed him to take advantage of compound interest and substantial returns. Broken down, it’s kind of a “set it and forget it” mentality that keeps giving.
Everyone starts from somewhere, and Warren Buffett started by following the advice of Benjamin Graham — at least as far as his emphasis on value investing goes.
Value investing involves identifying and selecting undervalued stocks that have long-term growth potential. This means largely ignoring current trends, being patient and thoroughly researching stocks. It’s about seeing the bigger picture instead of focusing on in-the-moment market conditions.
If you’re interested in long-term investing and don’t mind a bit of research, you might also want to learn from Graham’s success.
Another financial leader when it comes to the “set it and forget it” way of investing is John Bogle, the late founder of the Vanguard Group. Bogle is often credited with establishing the first public index fund, a simplified — and less expensive — way to invest.
If you’re looking for simplicity in your investments, Bogle’s strategy might be the way to go. It involves diversification, which negates some of the risk involved. But it does require sticking with it for the long haul — and weathering a few stock market changes along the way.
If you prefer a more active approach to investing, Peter Lynch is worth listening to. He’s the former manager of the Magellan Fund at Fidelity. His investment philosophy is fairly simple, but it does emphasize the importance of understanding what you buy.
Lynch’s investment strategy breaks down as follows:
Only buy what you know and understand.
Keep things simple, but do your due diligence before you buy.
Invest for the long run — whether that’s 10, 15 or 20 years.
Like many other money experts, Ramit Sethi’s got a lot of advice — much of which is beginner-friendly. Take his advice on real estate investing as an example. He suggests doing your research and sticking with systems that have been proven to work.
Whether you want to get into rental properties, real estate investment trusts (REITs), house-flipping, private equity funds or otherwise, you’ve got options. Each one comes with its own level of accessibility and risk, so — as with all advice — take it with a grain of salt.
