There are many alternatives proposed by experts in economics to save and to prevent our finances from running some kind of risk. But is there really a magic formula? Professor of economics at Harvard University (United States), Laurence J. Kotlikoff, has shared in a CNBC article the guidelines that he himself has followed to manage his money and obtain financial security.
Thus, the author of the best-seller ‘Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life’ and one of the most influential economists at an international level collects his Basic principles of money management.
Avoid college loans
The economics expert assures that requesting a loan to study is “too risky and expensive” and advises avoiding it as far as possible. “But you can get a good education without mortgaging their future and potentially ruining their career plans” through scholarships or training programs.
Try to buy your own house
It is clear that trying to buy a home is more feasible than renting, in the long term. “Having more of your money invested in your home is a way to protect you from federal and state income tax on assets,” he says.
For this reason, he advises repay mortgage loans as soon as possible and reduce the repayment period to pay less interest. In this way the financial risk will also be lower. “Let’s say you’re 70 years old and you’ve found your dream location. Renting for the rest of your life runs the risk of rents going up with no chance of your fixed income going up,” he says.
Choose the jobs that are least in demand
All things being equal, that is, in skills, education and experience, people who apply for a job that the rest do not want usually get a higher salary. “Economists call the extra payment a ‘compensating differential’‘ And the key to harnessing it is to find something you love that other people don’t.”
Don’t worry about changing careers or jobs
It can be alarming, but changing careers or jobs is not the end of the world and it is a good idea to compare all possible options. In addition, the expert recommends considering the option of working on your own. “Starting the right business the right way will increase your remaining future earnings and provide you with unmatched job security.”
think about tomorrow
You have to keep thinking in the short and long term. Is the current position in danger? Do you like work for the rest of your days? “Set a date every few months to do a career review.” because “your standard of living is your bottom line.”
Everything you decide in life has a price
Change studies, work, buy a house, get married, move house, have children and even get divorced. All these decisions have a cost, which must be sustainable.
And what about retirement?
For the economics expert, early retirement must be viewed as a really important decision because the benefits of enjoying more free time can mean a loss of years of income by not working and a lower pension.
“Of course, this isn’t feasible for everyone. But before you make any moves, figure out the strategy that will maximize the total lifetime benefits of your home,” he says.
.