Managing your money doesn’t have to be complex.
New York Times columnist, author, and financial planner Carl Richards boils down everything you need to know about personal finance into simple, black-and-white “napkin sketches.” University of Chicago professor and author Harold Pollack claims that the best money advice fits on a three-by-five inch index card.
To further prove that you don’t need to be an expert to understand personal finance, we’ve rounded up seven hard truths about money in cartoon form, courtesy of Albert, an upcoming app that provides simple financial advice and lets you act on it from your phone.
One of the best things you can do for your investments is leave them alone.
When it comes to money, our choices are often clouded by fear, greed, and nervousness. These emotions tempt us to constantly move our investments around – into what seem at the time like safer positions or more conservative investments – and can ultimately wreck even the most sound investment portfolio.
That’s because one of the best things you can do for your investments is leave them alone.
“Avoid impulsively selling an underperforming investment and stay the course with a diversified portfolio that is able to withstand inevitable short-term rises and dips in the market,” certified financial planner Shelly-Ann Eweka writes on Business Insider.
To help focus on your long-term investment plan, avoid the temptation to check a stock ticker or your account on a daily or weekly basis. Markets go up and down every day, and so do individual stocks – if you’re investing for the long term, you don’t need the anxiety of constant updates.
Credit card rewards don’t matter if you’re carrying a balance.
But the cash back or airline miles you earn will become negligible if you don’t keep your credit card balance at $0. Paying the minimum every month isn’t enough.
Interest rates vary depending on the card, but credit cards charge an average of 15% on unpaid balances. To get an idea of how costly this can be, check out this chart showing how charging $100 per year and paying the minimum would result in you paying thousands of dollars in interest over time.
If you want to save big, ditch your plastic.
You don’t have to lose your debit or credit card to save $200 each month. Try leaving your plastic at home and going with all cash for a couple of weeks. Research shows that people spend significantly more when using credit cards instead of cash, and several people have used this strategy to get out of deep debt.
Rather than blindly swiping your credit card, you may find yourself thinking over purchases more thoughtfully – it’s harder to part ways with your money when you’re handing over physical cash and watching it disappear.
Lifestyle inflation is dangerous, even if it’s only week to week.
Pay day is liberating, but it can be dangerous. When your bank account balance spikes every other week, it can be tempting to up your spending simultaneously – but overspending habits can be tricky to break once they’re formed.
You don’t have to spend every dollar you have.
If you’re an overspender lucky enough to avoid taking on debt, you’re most likely living paycheck to paycheck. That makes it hard to plan and set aside money for the future, when you want to make a major purchase like a house, take a trip, or retire.
As a good rule of thumb, live below your means – not at or beyond – at all times.
The best intentions probably aren’t enough to build wealth.
Sticking to a financial plan is a lot like sticking to New Year’s resolutions – it’s easy and exciting at first, but can quickly fall by the wayside.
Luckily, when it comes to your finances, you can pretty much automate everything today, meaning you can automatically send money to investment accounts, savings accounts, and creditors before you even have the chance to spend it.
This completely eliminates the need for self discipline when sticking to a budget and allows even the laziest of people to grow their wealth.
There’s a lot of noise out there – don’t let it drown out the basics.
There is a mind-boggling amount of financial advice out there – so much that it can be difficult to separate the noise from the facts, or know who and what to believe.
Start by avoiding the bad money advice out there, making sure your financial adviser is working in your best interest, and following these steps that anyone can take to get rich.
And remember: Everyone’s financial situation is different. Do what feels right for you.
Oftentimes, the best money advice is embarrassingly simple.
For more illustrated insights, follow Albert on Instagram.