Before you spend, you should save. This is the golden rule of finance. Many people spend money that they earn, to buy things that they do not need, to impress people that they do not like.

A wise person does not have money in his heart but in his head. Wealth is not about great possessions but rather about having fewer wants. It is not about how much money you make but about how much you keep.

Financial advice is important. You can obtain advice from a professional. Alternatively, you can visit financial advisor websites to obtain much needed financial advice.

Managing finances requires having a budget. You should budget for every single cent. That will prevent impulse spending. If you do not plan, you are preparing to fail. A financial plan should be smart and realistic.

You should save for retirement. As soon as you get a job, you should start saving for retirement. Your employer will contribute something towards your retirement. However, that will not be enough. You will also require personal savings.

Retirement is a financially involving phase of life. Old people usually have age-related diseases. Treating these diseases requires money. During retirement, you might want to travel all over the world.

Saving is not enough. You should invest the money that you save wisely. You should not put all your eggs in one basket. You need a diverse portfolio. Such a portfolio will reduce the risk level.

Real estate is an asset worth having in your portfolio. It is the most important asset. That is because it has a limited supply and an unlimited demand. The best properties are in strategic locations. Great real estate will appreciate by more than tenfold within a short period.

Most rich people have many properties. True wealth lies in real estate. You can purchase an urban property. Alternatively, the choice can be farmland.

The portfolio should also have stocks. Shares of blue-chip companies will suffice. Before you purchase any shares, you should analyze the dividend to earnings ratio. You should purchase the stock of a company that has a business model that you understand.

Another investment is precious metals. These are recession and inflation proof. It is better to own precious metals than to have money in a savings account. The interest rate of a savings account is not enough to compensate for the rate of inflation.

The Bottom-Line

You need to know how to manage your finances. You should not spend all your income. You should save for the raining day because there will always be a rainy day.