My advice is to stop the following bad habits:
- Stop keeping cash in your bank account: save money and, after you have set up a good emergency fund in cash, invest everything else in one or more low-commission, index-tracking, ETF funds, as soon as possible. The Vanguard 500 ETFis a good starting point. This must be a priority. Because compound interest takes time (like a decade or more) to produce its amazing results, the younger you start, the better. (Since many asked in the comments, I also recommend to Google: compound interest+ dollar cost averaging in order to understand the benefits of this double-pronged strategy).
- Stop smoking, doing drugs, drinking alcohol: these things do not add anything to your life, and only subtract cash from your bank account (that you should rather invest in ETFs).
- Stop watching TV: same as alcohol, TV does not add anything to your life. By not watching TV, you can spend more time reading interesting non-fiction books to educate yourself about the most different topics. Knowledge has a powerful compound effect: as you progress putting different knowledge eggs into your basket, your analytical firepower will gradually increase and the benefit that you will derive will be exponential. TV does not add anything to your knowledge basket. Sell it, and invest the money (either by buying ETFs or by buying many interesting books) instead.
- Stop eating outside: learn to cook your own meals. Cooking at home will naturally push you to learn new recipes from different countries: many of these new recipes that I learnt turned out to be new “classics” at home. Delicious!
- Stop Facebook: it’s even worse than TV. You lose your precious time while Zuckerberg & Thiel make millions out of your eyeballs glued to some cat videos, fake news & holiday pics. It makes no sense. The first step should be to delete the Facebook app from your iPhone (do not close the account, just delete the app): in this way you will not receive a million of useless notifications every day and you will very easily reduce the wasted time by 90%.
- Stop sitting on the couch playing PS4: it’s probably as bad as Facebook. Every time you want to play a game, go for a run outside instead.
- Stop surrounding yourself with all these fake friends you don’t care about: they don’t care about you either and they will dump you at the first time you will be in need. It is better for you to be prepared not to count on them (or on anyone, actually). Text/call/see your parents/grandparents more, instead.
- Ditch your accountant: learn how to do your own taxes, instead. This will save you a lot of money and will give you insight on the mechanics of the tax system (which is unexpectedly very useful in many fields of life & business). Once you have learnt to do your own taxes you can hire your accountant again and you will then be able to give him guidance, check for potential mistakes, take informed decisions so to minimize your tax burden.
- Stop shopping to impress or please other people. It doesn’t work. They will still hate you even if you have a new car or some ridiculous Gucci shoes. The rare, true friends will like you and be at your side regardless of what you own. Once you will start doing this you will learn that you are not what you own. We do not need99% of the stuff for sale out there anyway. Acquiring this mindset will free you from a thousand mental layers that cloud many of our life choices. It feels amazing.
- Stop accepting wrong things in the status quo: you can change things for the better. It just needs a brain and hard work.
- Stop being a cheapskate: show the fewpeople that matter to you how much you care about them. Bring flowers to your girl/wife/mum/grandma. Make a nice wedding gift to your best friend. Offer discreetly to pay a dinner out if your friend cannot afford. Be a gentleman for all people you interact with. Write a thank you card to a colleague who was helpful in a difficult situation (I still remember the “thank you” card that one of my first bosses left to me — a young and inexperienced trainee at the time — 19 years ago just saying: “You are a star!”) . Be grateful, very grateful, for these good people that touch your life kindly. Do not be afraid to spend money for those who are important for you and deserve your attention, kindness and generosity. The sky will not fall if you spend money and give them your attention and, most importantly, they deserve it. I have seen countless of truly good persons being hurt, friendships broken-up in horrible ways, just because of people being outright stingy. Also, remember to give a part of your profits to a charity that is important for you: the good these people do to this world is invaluable.
- Stop not taking (calculated) risks: career-wise,with time we all get lazy and tend to accept the current status quo: our job, our boss, our colleagues, our commuting, etc. This translates into fantastic opportunities being lost because we are too scared to abandon what we consider our current safe harbour (which most of the times is not much more than a steady salary). If you hate your job, if every Monday morning feels sour, if at work you are not respected for who you are, if your boss does not appreciate your efforts, if you are not paid enough, if your last salary increase was ridiculous: these are all signs that should push you to reconsider your career choices and check if anything better is available on the market. Nothing out there? Not all hope is lost: keep in mind that there has never been a better time in the history of civilization to be your own boss and start your own business.
- Stop taking new debt. Ditch your credit cards. Pay all the new stuff you want to buy upfront. No exceptions. If you cannot afford something upfront, simply do not buy it (most likely you will not need it anyway). Same for the “mortgage” (from the French “death pledge”): rent / share a cheap place and invest your savings in stocks instead. If you already took debt, repay it as soon as possible: sell stuff & work double shifts if necessary.