#1: When You Spend, Have Something Left
Spending money is fun. One of the true tests of adulthood, though, is to spend less than you earn today so you can enjoy more things later on with the savings you’ve accumulated. My wife Enid and I made it a goal, early in our marriage, to set aside for future enjoyment at least 10% of what we earned. In many years since, we’ve socked away 20%, 30% and more of our income.
By allowing that money to grow (through prudent investments), we’ve been able to handle major purchases — from extreme makeovers on our house to family vacations to college and weddings for our three daughters — without a hitch. Saving is the key to not worrying about how you’ll pay for the things you really want.
I recommend saving off the top of every paycheck, automatically if possible. Company 401k plans are excellent for this purpose. So are monthly mutual fund accumulation plans (See Tip No. 5).