7 Tips on Saving Money

"How to save money" tips and guides often contain the same old advice. Most of these articles are focused on expenses generated by day to day activities and ways to minimize those expenses. While these do indeed help to save money and lower expenses the money saved is usually a small (though always meaningful) percent of our monthly income.

In this article I will focus on a different part of "How to save money", a much more effective and meaningful one: The financial part. Simple budgeting, as mentioned above, does indeed help to lower expenses. But it is not an empowering tool. Using finance wisely in our lives can have a stronger and more meaningful effect then ever expected.

The following are 7 tips for better personal finance understanding and management:

1) Use the power of compounding interest - "The most powerful force in the universe is compound interest" Einstein is often quoted for saying. Every 100$ saved for 10 years with 10% yearly interest will be worth 2.5 times more. Save for 20 years and earn 6.7 time the amount.

2) Make long term diversified investments in stocks - the stock market has proved to provide the highest available return on investment - not without risk of course. This is where long term and diversification come to play. In long term I'm referring to periods longer then 10 years. By diversification I'm referring to investments across various industries, geographies and financial assets (stock, bond, ETF etc.). Further reading in these subjects is highly recommended.