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MONEY COMMENT
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Currently, I'm reading The CEO of the Sofa, a very droll book by American satirist P J O'Rourke. In chapter two (written in October 2000), PJ muses on the dangers of investing and the plunge in the NASDAQ, which includes this great quote from American economist Charles P Kindleberger: "There is nothing so disturbing to one's well-being and judgment as to see a friend get rich." Some of us don't like to see the Joneses doing better than us - it's almost a British obsession to try to keep up with them. In my opinion, this is a recipe for permanent misery, as we end up spending our lives comparing ourselves to others and falling short. Another problem is that many people are swayed by "conspicuous consumption" - we see our neighbours' flash sports cars and wish for one ourselves. Personally, I'd much rather have a tidy little portfolio of shares (which pays me an income and grows over time) than an asset that depreciates as soon as it leaves the showroom. As far as I'm concerned, "deferred gratification" is the name of the game - investing money now with the aim of having far more a few years down the line. So, how can we arrange our finances so that we can beat - not keep up with - Mr & Mrs Jones? Learn to budget Learn to control your debts Learn to save Learn to protect yourself, your family and your belongings Learn to invest Finally, if you're feeling especially generous, you could explain to the Joneses how easy it is to become Foolish...(!) Visit our centres: Get Out Of Debt | Savings | Insurance | ISA
Who'll be better off in the long-term: the worker saving £3,000 of his/her £15,000 salary every year, or the City player squandering £50,000 more than his £500,000 salary, year in, year out? If you're going to beat the Joneses, you need to spend less than you earn - so learn how to budget.
About one-tenth of all spending by British adults is financed by credit and if we all stopped borrowing money, our economy would rapidly slump into recession. Nevertheless, smart Fools don't suffer debt gladly, so learn how to dynamite your debts today.
My parents opened savings accounts for me and my sister when we were both small children. I cleared out my account pretty quickly, rarely added to it again and spent a large part of my adulthood in debt. On the other hand, my sister saved hard for years and was rewarded with windfall shares when her building society became a bank. Which of us was the Foolish one? Here's how to earn more interest and take advantage of tax-free savings.
Don't assume that you can sail through life without having any insurance - nasty things don't just happen to other people. If your employer gives you a decent package of benefits, you're halfway there. Regardless, you need to buy what you can afford (especially if you have a family): life assurance, home, motor, long-term sickness, critical illness, health and travel cover. Shop around using our Insurance Centre.
Once you've built up some cash to pay for emergencies and rainy days, you'd do well to start thinking about your long-term goals. If you're looking ahead five or more years, you stand a good chance of earning superior returns by investing in shares. We like simple, flexible, low-cost index-tracking ISAs.