10 ways to set yourself up for a better financial future

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Everyone wants to have a better financial future. But getting from where you are today to where you want to be tomorrow can seem daunting. Where do you start? What should you do? Where should you look?

For years Clark has been talking about ways to spend more, save less and avoid ripoffs. If you want to keep more money in your pocket, it’s time to learn these lessons from him…

Read more: 9 ways to pay for college without student loans

Follow this advice to build your wealth

1) You have to save money. It’s tempting to want to spend everything you earn, but that’s not the way to build a sound future. It’s critical to save. Saving a dime out of every dollar you make is a good rule of thumb. The earlier you start, the better, but it’s never too late even if you’re over 40.

The money you set aside will give you more freedom to make choices, like taking a lesser-paying job because you love the work, or starting a business.

2) Invest for the long haul. Sometimes people are afraid to buy stocks because they see them as too risky, but you need your money to grow faster than inflation to build your buying power. Another mistake people make is selling their mutual fund shares when the market is down.

If you buy low-cost index funds regularly, such as through a 401(k) plan, and keep doing so whether the market is up or down, you’ll build wealth over time. The markets may have a bad year or two, but they invariably rise over the decades.

3) Keep debt to a minimum. When you owe money on your credit cards or on an expensive car loan, you’re a financial prisoner, giving your hard-earned money to a lender every month to pay interest. Pay your credit cards off every month and keep your debt to the bare minimum and you’ll have more to save or to spend on the things you really want.

4) Buy a house. Despite the post-recession housing crash, buying a house remains an excellent way to build wealth over time. In fact, with interest rates still low, housing is incredibly affordable.

Paying rent puts money in someone else’s pocket. Buying a house means paying down your mortgage balance a little bit every month and seeing the value of your house grow over time, with the ever-widening gap between the two—known as ‘equity’—being yours to keep.

5) Keep your cars for a long time. Cars are expensive, and they lose value over time. So they are an expense, not an investment.

If you buy or lease a new car every few years, you’ll never stop making payments. If you buy a sensible used car, pay it off and keep it for years after the loan is done, you’ll keep the monthly payments for yourself. You can even save them and either pay cash for your next car, or make a huge down payment and take a tiny loan.

6) Keep a good credit rating. Nothing good comes from having a bad credit rating. It’s hard to get a mortgage or a car loan, and you’ll have to pay a higher interest rate if you do.

Pay your bills on time and don’t use too much of your available credit, and check your credit report for free at least once a year at AnnualCreditReport.com.

7) Spend your money wisely. Shop for good prices on the things you have to buy and don’t waste your money on things you don’t—from $6 cups of coffee to cutting-edge electronics—and you’ll be way ahead of the game.

Keep a budget and use a free online program like Mint.com to track your spending and make adjustments when you slip.

8) Travel smartly. Traveling is one of the great joys of life, and you can do it without going to the poorhouse. Look for airfare, hotel and car rental specials, and try to be as flexible as possible in your travel dates and where you choose to go.

Buy what’s on sale and save, just like at the supermarket. And you don’t have to eat in a fancy restaurant every day you’re on the road. Rent a home with a kitchen through Airbnb.com and cook for yourself, or grab a sandwich at a deli and have a picnic.

9) Don’t let companies take advantage of you. Persistence is the key when you have a consumer problem. People who are persistent usually win. People who give up in frustration generally miss the chance to have the problem resolved to their satisfaction.

10) You don’t have to change your financial habits all at once. Each year, make more good decisions and fewer bad ones, and over the years you can steer your finances into calmer, warmer waters.

Read more: 8 money tips that will transform your finances and save you thousands

For more money-saving advice, see our Money section.

Clark’s advice when a buying used car

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Theo Thimou About the author: Theo Thimou
Theo is director of content for clark.com. He has co-written 2 books with Clark Howard, including the #1 New York Times bestseller Clark Howard's Living Large in Lean Times.
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