The Best Money Advice I Ever Heard

Here are three time-tested steps to a blissful money/life balance.

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Having lots of money will not make us happy.

Equally, so long as we have enough for our essential needs, possessing little money will not make us miserable.

Money, in itself, does not have the power to do that.

But the way we organise our money has the potential to condemn us to a life of simmering misery, or to elevate us to a condition of deep-seated satisfaction.

Here’s the best money advice I ever heard for achieving a well-balanced and satisfying life with money.

Simple, yet powerful

The money creed that influences me so much is easily expressed — save some, spend some, and give some away.

That’s it.

Simple, yet powerful.

Step 1

Save some. It doesn’t matter how large or small our income might be, spending less money than we receive, and saving what is left over, can be a big step towards achieving a feeling that all is well with the world.

When savings grow, as we add more each month, our feeling of contentment can grow too. With a pot of saved money, we can find ways to make the money itself earn money. Our savings can multiply thanks to compound interest, where the interest itself earns interest. Here at the Motley Fool we make whole careers from finding ways to help that saved money compound, such as by investing.

By saving some, we put ourselves on the right side of compound interest, and compound interest is to money what steroids are to muscles — everything gets bigger!

Contrast that situation with the opposite — spending more than we receive. Now, instead of building up savings, we build up debt, and that’s a sure-fire way to achieve a feeling that something’s wrong with the world. The problem with personal debt is it that it places us on the wrong side of compound interest. Now we are paying rather than receiving — those steroids show us their negative effects by working against us.

Step 2

Spend some. Really, we should fill our boots. Life is for living. What is the point in being alive if we don’t live, love and laugh? I’m not just talking about the electric bill or the weekly shop either. We should eat a few truffles, drink a few cocktails, and take ourselves off to an idyllic location for a couple of weeks of rest and relaxation every so often.

Allowing ourselves to indulge, to enjoy, to simply ‘be’, that’s a powerful way to create happy memories, to re-charge our batteries, to share our time with those we love. In short, living, really living, is a great way to weave that underlying thread of happiness that we all deserve. Living like that involves spending some money, but the key to enduring happiness through spending is to observe rule one first and to save some before we spend some.

Step 3

Give some away. That’s the turbo-charger for money happiness, I reckon.

The world can become a delightful place when we adopt a generosity mindset. There’s nothing quite like the inner contentment that tipping others can bring us. Then there’s the power of the gift. A well-targeted and thought-out gift can bring as much or even more joy to the giver than the recipient.

There’s also opportunity to direct a portion of our funds to charity and good causes for a similar internal effect that contributes to our sense that all is well with the world. However, we should be sure to observe steps one and two first — otherwise, a giving habit could end up contributing to underlying internal unhappiness.

Let’s do it!

The best money advice I ever heard is to save some, spend some, and to give some away — in that order, and no one step without the others.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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