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We all hear the clichés about how to spend and not spend our money. However, how do we know that the financial tips that have been ingrained in us from the get-go are actually valid claims? In this post, we will discuss whether or not it is time to leave these myths behind.
Save everything at all costs
Haven’t we all been told to save every penny? While this strategy may have worked while working a summer job in your teens, there aren’t too many benefits of letting your yearly salary age in a low-interest-earning savings account. While it is definitely important to put a sufficient amount of money aside as savings, investing even a small sum of money opens windows of opportunity to put your money to work for you! Whether it be a stock, bond, ETF, or mutual fund, with a little bit of research or assistance from a financial advisor, you may amass significant returns on your investment. You can even choose to invest in yourself—whether it be furthering your education or learning a new skill, it will always be to your benefit.
Investing is a risky game
While there is no guarantee you will earn money back on your investment, investing is only as risky as you make it. One of the key rules when investing is to not put all of your eggs in one basket. It is important to create a diversified portfolio—meaning spreading out your capital in a variety of investment products (i.e.: stocks, mutual funds, bonds, etc.). (Please note that diversification is a method of helping to control risk. It does not assure a profit or the avoidance of loss.) There is no magic formula to achieve a risk-free investment portfolio, rather, you (and your financial advisor, if you seek assistance) will have to come up with a portfolio that has an acceptable level of risk for you. As you invest, it is important to monitor the market and stay on top of the companies you have invested in.
You should pay in cash whenever possible
Some places may offer discounts for customers paying in cash. If this is the case, go for it! However, it isn’t necessary to make every transaction with cash. Many people are misled by the stigmas against using a credit card. However, those “horror” stories usually apply to those who are abusing their credit cards and spending far past their limit every month, hence, accumulating debt. In fact, using a credit card helps you keep a track record of your purchases while also allowing you to receive awards points that can give you discounts in a plethora of areas.
The cheaper, the better
You are at the grocery store and you see two bottles of laundry detergent. Bottle A is $3.00 and Bottle B is $4.00. We are going to go with Bottle A, the no-brainer, right? No. While the item may be cheaper, there are usually circumstances that allow it to be sold for the lower price. For example, Bottle A could be smaller in size, or it could be made with low-quality ingredients, or it could be from a brand with a poor reputation, and the list goes on. While it is always tempting to choose the cheaper alternative, it is important to take into consideration whether the financial value will serve you best in the long run.
Always buy your items on sale
How many promotional emails flood your inbox a day claiming “FINAL SALE: CLEARANCE 75% OFF ENDS AT MIDNIGHT”? While it is tempting to browse your favorite online retailer and pay a fraction of the price, many people end up buying a great deal of merchandise. When you logged onto your email, did you expect to drop $50.00 on a few tops and a new pair of shoes? More often than not, the answer is no. Large discount sales give customers a sense of urgency to beat the clock and fill up their carts with the discounted items. These are usually not accounted for in one’s monthly or weekly budget and just add yet another expense. Instead, you should shop only when you have a specific product in mind. From there, you can do the research and look for your item on the sale rack.
Hopefully, these tips can help you become a smarter saver!
If you have any questions about investments or financial planning, please contact any of the Infinex Financial Advisors at Rhinebeck Asset Management, a division of Rhinebeck Bank, by visiting www.rhinebeckassetmanagement.com or call them at 845-567-3930.
Investment and insurance products and services are offered through Infinex Investments, Inc. Member FINRA/SIPC. Infinex and Rhinebeck Bank are not affiliated.