Protecting Every Penny

In modern society, money is unmistakably important. It is the medium of exchange that allows us to buy the necessities of life, for example, food, water, and shelter. These days, it even allows us to enjoy grand luxuries which kings and queens from feudal Europe could not enjoy. It also helps us stay healthy so we can live a long life. For these reasons, it is necessary to protect every penny you have.

There are many ways to protect your money. To start, be cognizant on how you spend your money. Don’t go buy things you don’t need; they are just things. Within a couple of days, you probably won’t care about those things, but you will care about your empty bank account. Besides, living a minimalist life has its advantages. Firstly and most importantly, you have more money by living a simple life. Secondly, you have less to manage. In other words, your life is actually better. Of course, a minimalist life doesn’t have to mean a boring life; you can still have grand dreams to reach for. And, if you are a multimillionaire and want to buy a new Tesla, then go for it; you have the money. However, if you are living paycheck-to-paycheck, don’t take out a car loan to buy a nice car; you don’t have the money. If you need a car to go to work, buy a used car.

Additionally, keep track of all your spending. Many finance gurus suggest writing a monthly (or weekly) budget. Of course, many of those gurus don’t practice what they preach. Making a budget can be useful, but it is difficult to have the discipline to continuously do it. If you have the discipline to make a budget and stick to it, then go for it. There are some other ways to track your money though. One way is to keep all the receipts of your purchases; if somebody doesn’t give you a receipt, have a small piece of paper to write down the amount you spent. Then, at the end of the day, record your purchases in a notebook or in an Excel spreadsheet on your computer. This is useful because it helps you understand where your money is going. Every penny counts, so know how many you have and where they are going.

Knowing how much you spend is important, but knowing how much you have is equally important. Many people have money in numerous bank accounts, 401(k)s, mutual funds, and in a jar buried in the back yard. Wherever your money is, be sure to keep a ledger that tracks all your money (and other assets like stocks, gold, real estate, bitcoin, etc.). Either weekly or monthly, sit down and record how much money you have in every account. If you have old 401(k)s or other accounts from the past but don’t know where they are, locate those! It is money!

Also be careful with your investments. It is important to have your money work for you. However, don’t just put your hard-earned money into an investment because your sister’s husband told you to. Do the necessary research. If you want to buy a stock, read the 10k annual report. Then look at the numbers. Is the stock on sale or overpriced? How is the P/E ratio? How is the P/B ratio? How about the PEG ratio? What about the manager? Then, if it is a good place to put your money, buy the stock. On the same note, if you buy a stock, mutual fund, index fund, or whatever, be patient. Unless you are a day trader, just let your investment sit for the long run. If the economy goes into a recession, who cares; go buy some more. By selling when the price is lower, you lose your money. If you wait for a year or ten, then your money will come back and then some. Take the advice from the great investor, Warren Buffet who has two rules to investing: “1. Don’t lose money. 2. Don’t forget Rule No. 1.”

It’s also important to be careful with your money so it doesn’t get lost or stolen. Obviously, when you go outside, make sure your wallet is not in a pocket that can easily be compromised. Same goes for a purse; keep it on you at all times, and bury your wallet deep inside. Protect yourself online as well. There are many hackers and scammers in this world that have no problem stealing money from people online. If you sell something online using PayPal, take the time to ensure you have your customers information. Make sure their identification matches what is on PayPal. You could even have them take a picture with their ID card and sign with their name and date on it. Many scammers purchase items from sellers online, then reverse the PayPal payment later. Same goes for bitcoin. If you own bitcoin, then do not keep your coins on an online exchange. Buy a hardware wallet like the Ledger Nano S. or Trezor and put your coins there.

Remember, whether you are a capitalist, communist, or socialist, money is important. Be sure to know where all your money is and spend it – or invest it – wisely.

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