By Motley Fool Staff | More Articles
Most of us have heard the old adage, "Pay yourself first." It has been trotted out so often that it's part of the financial canon -- the de facto Rule No. 1 for managing your money.
It's certainly sound advice, but frankly, it leaves us Fools hanging: How much? How often? Where to put it? What's next?
Don't pay yourself just yet
As far as financial rules of thumb go, we think we've come up with a better one. Just in case you overlooked the big, bold headline, we prefer this mantra: Treat every dollar as an investment.
That's the very foundation of successful investing. We like it because it offers a clear guideline for every financial decision you encounter. (Plus, "Don't buy stuff you cannot afford " was already taken.)
Make one great investment every day
To us, an investment is more than something you make in your brokerage account. An investment is anything that affects the quality of your life. Once the basics are covered -- food, shelter, workplace-appropriate attire -- every dollar equals opportunity. And every day
presents new opportunities to make your money work harder for you, whether for long-term gain (retirement savings), short-term safety (emergency fund), or immediate pleasure (mocha latte -- hey, we're not here to judge).
After a while "treat every dollar as an investment" becomes second nature. It seeps into your subconscious like a catchy song you just can't shake. Soon you'll be looking for "investment" opportunities in every nook and cranny.
But before you set up your brokerage account and dive in, make sure you're not overlooking a few essential first investments.
Investment No. 1: Pay off The Man. In almost every scenario, there is no better use for your first freed-up dollars than paying off high-priced debt, which, for most, means revolving credit card debt. We'll prove it.
Consider the difference between setting aside $200 a month and coming up $200 short and covering it with a credit card. After five years of that -- assuming you simply stuff your $10s and $20s into a coffee can, your credit card charges 18% interest, and you pay a minimum $15 a month toward the balance -- here's where you'd be: