Savers' Savvy Sayings (Part 2)

The following article is the second part to a two-part mini-series. This particular article focuses on useful tips associated with saving and investing.

The following article is part of a series of two. They are a collection of memorable sayings to help all people concerned with personal finance. Part 1 includes sayings associated with the building of savings in the Multimillionaire Road Get Rich Plan. These include ideas such as working hard, budgeting and careful spending to increase your wealth. Part 2 is to do with how to invest and keep those savings to build your existing wealth.

Part 2: Sayings for Keeping your Savings


The borrower becomes the lender's slave
You can't build wealth if you owe others money. That is why, after paying for your needs (not wants) the next priority is paying off debt. Debt is the rock sinking your financial boat as you sail the wide Accountan-Sea. You can't ride on the waves of wealth until you unload yourself of your heavy cargo.


Don't save what is left after spending; spend what is left after saving
As I mentioned in part 1, part of the mistake that non-savers tend to make is that they prioritize spending wrong. When they complain that there isn't money left-over after current spending to save they have already made the mistake. After paying for your needs such as bills and food, the next job is to pay off debt and then transfer money from your current account to a savings account. My personal target it 20% but I want to push that by the end of 2013 to 25%. Only after you have saved a substantial portion of your income (i.e. not simply a few pennies here and there), only then should you buy any luxuries.


Don't put all your eggs in one basket
We've all heard this one before. It suggests that the process of investing should involve diversification of your assets. Make sure that you spread your risk over several stocks, shares, asset classes, both liquid and illiquid.


Never test the depth of a river with both feet
The idea here is a simple but powerful one. It suggests that if you are going to invest in a risky asset class, make sure it is only a small portion of your income. This is part of the idea of diversification.

If you found this article interesting, why not check out the first part of the two-part mini-series.

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Daisy @ Add Vodka said...

"Don't save what is left after spending; spend what is left after saving" - Interesting - I've never heard of that saying and I'd never really thought of it that way. I like it!

Miss T @ Prairie Eco-Thrifter said...

I like your point about not putting all of your eggs in one basket. This is key successful investing. Diversification helps limit your risk.

Mr. Moneybanks said...

Hi Daisy, yes that's also my favourite saying. So simple yet it has huge implications for the way one sets up their savings in future.

Thanks Miss T

WorkSaveLive said...

I'd definitely echo Miss T's statements: diversification is key! I believe it's even important to go beyond extreme mutual fund diversification and be invested in real estate, personal businesses, etc.

The borrower is slave to the lender quote is straight from the Bible and one that I've learned the hard way. If you have debt hanging over your head, then you are trapped by it. It's just a dark cloud that always is over your head.

Mr. Moneybanks said...

Diversify your diversified assets! I like it!

This That and The MBA said...

I agree with WorkSaveLive, mutual funds while diversified are still what a mutual fund manager thinks is best diversified. So throwing all your eggs in this one diversified pot is not the best. Selecting a few funds is the way to go.