The 3 Best Pieces of Financial Wisdom From Oprah Winfrey

It's good to be Oprah.

In 2015, Forbes estimates her net worth at $3 billion, making the actress, director/producer, entrepreneur, TV personality, and philanthropist rank as one of America's most successful women.

From movies to books to TV shows, it seems that everything Oprah touches turns into gold. There's a lot that we can learn from Oprah, so here are her three best pieces of financial wisdom.

1. Change Behaviors Holding You Back

"The greatest discovery of all time is that a person can change his future by merely changing his attitude," advises Oprah.

Successful individuals often arrive at a point in their careers or financial plans where they hit a self-imposed ceiling. The culprit is our tendency to attribute all of our current behaviors, both the good and the bad, to our past successes. We fail to see that what got us here may not necessarily get us there.

For example, back in your 20s, you may have decided that socking away $200 a month from your paycheck was enough to build a healthy nest egg. Fifteen years later, you're now married and have two beautiful kids, and you're still only contributing the same $200 per month to your retirement account. Assuming that your retirement account was to have an 8% return compounded annually, you would have $67,955.99 at the end of 15 years.

Sounds pretty good, doesn't it? After all, if you're planning to retire at age 65 and keep things up, you would have close to $1 million by your target retirement age.

However, $1 million may not be enough. Not only is your financial situation different very different from your twenties, but also more than 75% of registered investment advisors suggest a retirement savings goal of $2 million for Millennials. Set up a meeting with your financial planner once a year to determine if you need to apply any changes. 

2. Spend Money Wisely

In her book What I Know for Sure, Oprah advises, "I hope the way you spend your money is in line with the truth of who you are and what you care about."

This deceivingly simple nugget of advice encompasses two key aspects of financial planning.

Spend in Line With Who You Are

Keeping your wants versus your needs in check is a critical skill for more effective budgeting, saving, and retirement planning.

• You need a wallet to carry your money and cards, but you want a Burberry wallet.
   
• You need a case to protect your smartphone, but you want one made with Swarovski Elements.
   
• You need a car to get to work, but you want a Ferrari.

Oprah is right in recommending spending your money according to who you really are. If you're constantly complaining that you don't have any money left to save or pay more than just your minimum credit card monthly bill, then you're very likely to be living above your means. Look for ways to cut back on your expenses by finding cheaper, yet equally effective, alternatives. For example, you could stop paying $5 per shaving blade by switching to Harry's or Dollar Shave Club and instead pay just between $1 to $1.88 per blade. 

Of course, sometimes you have valid reasons to splurge, particularly if it allows you to generate income. For example, famous piano player Liberace won a case against the IRS and was able to deduct his lavish costumes as part of his business expenses.

Protect What You Care About

And what we care about the most is our loved ones. Be it your spouse, children, parents, or somebody that had a major influence in your life, your loved ones need to be protected against any type of financial hardship.

When you're the main breadwinner in your household and your spouse or children count on you for covering important expenses (such as mortgage payments and weekly grocery trips), then you need a backup plan in case you were to pass away. Nobody likes to think about their own mortality, but having a life insurance policy and building an emergency savings fund are essential pillars of any successful financial plan.

3. Tackle Goals With Patience

Despite her multiple successful ventures, critics have been quick to jump on the stumbles of Oprah's OWN network. However, not achieving immediate success didn't discourage her from her latest project.

During that period of turmoil, the President of Harvard University asked her to do the class of 2013's commencement address. Addressing the mishaps of her OWN network, she said:

It doesn't matter how far you might rise. At some point you are bound to stumble because if you're constantly doing what we do, raising the bar. If you're constantly pushing yourself higher, higher the law of averages not to mention the Myth of Icarus predicts that you will at some point fall.

This piece of wisdom is applicable to several financial scenarios.

• The price of stocks is bound to go up and down over time, causing you to sometimes lose sleep. Still, in the long run, investing in stocks is necessary to maximize your retirement account. However, it's necessary to hold stocks for a long time and not sell them at the first drop in price.
   
• There may be times that you won't be able to make contributions to your retirement account. It's important to save up for retirement, but when life throws a curveball at you, you may need every cent from your paycheck to cover medical bills and pay unexpected expenses. Don't add more wood to your fire, focus your full attention on the issue at hand, and then catch up with your retirement contributions on future paychecks. In 2015, most individuals can contribute up to $18,000 to their retirement accounts as long as it's before the end of the year.
   
• Working overtime too often has negative effects on your health. Everybody loves the extra cash that comes from an extra shift or work during a holiday. That cash may come at a price. A study found that people who work 11 or more hours a day are over twice as likely to suffer from depression than those who work seven to eight hours a day.

Nobody is perfect, so don't be too hard on yourself. As Oprah suggests, "You CAN have it all. You just can't have it all at once." Be patient and continue to work towards your financial goals.

What are other great pieces of financial wisdom from Oprah Winfrey?

Source: http://www.wisebread.com/the-3-best-pieces-of-financial-wisdom-from-oprah-winfrey?utm_source=zergnet.com&utm_medium=referral&utm_campaign=zergnet_601810

5 Destructive Money Behaviors to Stop Today

Check out the money moves that diminish your well-being - and stop them cold.

You might be sabotaging your financial well-being without even knowing it. Behaviors that might seem inconsequential, or perhaps even beneficial, could be preventing you from getting ahead financially.

"Destructive money habits will keep you poor and in debt unless you change them," said Thomas Corley, author of "Rich Habits: The Daily Success Habits of Wealthy Individuals." To change these actions, you first must become aware of them, he said. Here are five common money behaviors you should stop now.

1. Watching too much TV. During his five-year study of wealthy and low-income individuals for his book, Corley found that more than 77 percent of poor adults admitted they watched more than an hour of TV a day; 74 percent said they spent more than an hour a day on the internet. By contrast, 67 percent of rich adults he interviewed said they watched less than an hour of TV a day and 63 percent spent less than an hour each day on the Internet.

"When you're wasting your time watching TV, on social media or reading for entertainment, it leaves little time to do productive things like reading to learn, building relationships with other success-minded individuals via networking or volunteering, or building a side business," Corley said.

Not only will ditching cable-free up more time to be productive, but you can also save on that monthly bill.

2. Spending aimlessly. It's easy to lose sight of where your money is going unless you take the time to monitor your cash flow. Corley said that the wealthy individuals he studied made a habit of tracking their spending in the early days of building their wealth. Most low-income individuals said they didn't monitor their spending.

"If you don't have a lot of money, you need to get into the habit of tracking every penny," Corley said. You can track your spending with a spreadsheet or even free mobile apps, such as Mint.

Another approach to limit spending might be to ask yourself before making a purchase whether it will take you away from your goals. "This question habit eliminates any need for budgeting or self-discipline by replacing it with an awareness that occurs at the point of spending," said Todd Tresidder, a financial coach at FinancialMentor.com.

3. Paying bills late. One in 4 adults doesn't pay their bills on time, according to a recent National Foundation for Credit Counseling survey. Paying a bill late every now and then won't wreck your finances. But if that becomes a routine practice because you don't have a good bill-paying system in place, then you're hurting your financial well-being in several ways.

For starters, you're getting hit with costly late fees so you'll have less money to cover your bills. Moreover, routinely paying bills late might prompt your credit issuers to hike your interest rates or lower your credit limit, according to the NFCC.

If you're more than 180 days late on a payment, your debt typically is assigned to a collection agency or debt collector. Having debt in collections will lower your credit score and will remain on your credit report for seven years, according to the credit monitoring site myFICO. What's worse, your wages can be garnished to pay the debt you owe.

Set up automatic payments through your financial institution or through the company that is billing you to avoid paying bills late. If you need help, call your bank or service provider to walk you through the process.

4. Shelling out the minimum on your balance. You might be making minimum monthly credit card payments to free up cash for other expenses, but it's not an ideal money move.

"Paying the minimum is like running on a treadmill to nowhere. Not only will it dramatically slow down the pace of your payoff, but it will also mean paying lots more in interest," said Farnoosh Torabi, financial education partner with Chase Slate. For example, if you had a $5,000 balance on a card with a 16 percent interest, and you made a minimum monthly payment of $100, it would take you nearly seven years to pay off that debt. And you'd pay about $3,300 in interest, according to the credit card payment calculator at FinancialMentor.com.

Also, if you're paying only the minimum on a card with a high balance, you're not doing your credit score any favor. "A high debt balance effectively increases your debt-to-credit ratio," Torabi said. "That ratio makes up 30 percent of your credit score." So if you're not lowering that ratio quickly, you shouldn't expect to see your credit score get a boost any time soon.

If you carry a balance on several cards, pay as much as you can toward the card with the highest interest rate first, then the next highest, and so on to reduce the total amount of interest you'll pay over time. Or take advantage of a zero-rate card or a low-rate balance transfer offer to consolidate your debt onto one credit card. Then pay it down quickly.

5. Saving for retirement before an emergency fund. It's been hammered into your head that you must save for retirement. But financial experts say you should build an emergency fund first by setting aside enough cash to cover six months of household expenses in the event of a job layoff or other situation.

About one-third of Americans don't have any emergency savings, according to a recent survey by NeighborWorks America, a nonprofit community development organization. Without cash reserves, you might be forced to borrow or withdraw money from your retirement account to cover emergencies, said Rich Arzaga, a certified financial planner and founder and CEO of Cornerstone Wealth Management.

In that case, not only will your retirement fund take a hit, but you'll also have to pay income taxes on the amount you withdraw and possibly a 10 percent early withdrawal penalty if you're younger than 59 ½. To avoid raiding your retirement account or racking up debt to cover an emergency, consider lowering your retirement contributions, and funnel your money into a savings or money market account.

11 Pearls of Financial Wisdom From Jim Cramer

Jim Cramer is one of the most recognizable investing experts and makes a living offering energetic stock-picking advice each weekday on CNBC'sMad Money. The former hedge fund manager has a lot to say about how and where to invest your cash. He may not be a perfect investor (who is?), but he offers some sound, common-sense tips for anyone looking to place some money in the markets.

Here are 11 pieces of financial wisdom from Cramer, gleaned from his TV appearances, books, and interviews.

1. Invest in Stocks

If there is one piece of investment advice that Cramer touts more than any other, it's that stocks hold the key to wealth. His CNBC show, Mad Money, is entirely based on offering stock-picking advice. In his view, only stocks — and by extension, many mutual funds and ETFs — can someone amass enough wealth to retire comfortably.

2. Get Out of Debt

Cramer has noted repeatedly that it makes little sense to invest your money in the stock market when you have high-interest credit cards to pay off. "You're just not going to be able to generate returns that are consistently high enough to cancel out the sky-high interest rates that most [credit] cards carry," he told viewers in 2013.

3. Get Health Insurance

There are many young people who've decided to pay the Obamacare penalty rather than buy insurance, based on the notion that they are healthy and can live without insurance. This is a mistake, Cramer says. "One serious illness, a couple hospital visits, and you can kiss all the capital you've spent years building in the market goodbye," he said.

4. Don't Believe Everything You Hear on Television

Yes, Jim Cramer, the host of his own television show, actually said that. "I think you are naive if you simply believe what you hear. The vetting process to get on television simply isn't all that rigorous," he wrote in his book, Jim Cramer's Real Money.

5. Understand Bonds

Cramer is a stock lover but acknowledges that bonds can be an important part of many retirement portfolios. And, he says that if you don't grasp the mechanics and influence of bonds, you won't be as successful when picking stocks. "If you don't understand how bonds work, I think you will not be able to make nearly as much money as if you do," he wrote.

6. Don't Be Emotional

On his television show Mad Money, Cramer doesn't exactly come off as a cool and level-headed guy. But the truth is that he knows that research and reason drive sensible investing. "Emotion has to be checked at the door in this business," he wrote in Real Money.

7. Have Patience

Like many successful investors, including Warren Buffett, Cramer is a proponent of finding value. And that means that patience will play a big role in your success. "I see so many people throwing in the towel on companies that have real assets and real worth just because they aren't working now, and it angers me," he wrote.

8. Keep It Simple

Cramer's discussion of stocks can be bewildering to the new investor. But he recommends getting back to basics if you have a relatively limited amount of money to invest. On June 21, a Twitter follower asked Cramer what to do with just $300. "First 10 thousand goes into an index fund," he replied.

9. Give Wealth Back

In Cramer's view, it's not enough just to get rich. You need to do something with your money, by either giving it to charity or building new ventures. "If you get rich, and there is a good chance you will, try to give back, not just in charity but create something, a company that can grow," he told Forbes Magazine in 2014. "Invest in something new. I have helped start six businesses. Those have provided food, roofs over peoples' heads, and health care."

10. Invest Early for Retirement

Cramer has often told the story of how he lived in his car in the late 1970s but still managed to put $1,500 into a retirement account. Think of what that investment is worth now. Cramer is a huge proponent of using 401(k) plans and Roth IRAs to build retirement wealth with tax advantages.

11. Do the Work

If you want to pick winning stocks, Cramer says, you have to sweat for it a little. That means parsing earnings reports carefully. It means listening to investor conference calls. It means reading independent research reports. The good news is that all of these resources are readily available. "I have resources you don't have, but they are way overvalued compared to the information I glean from public information about stocks," he wrote in his latest book, Get Rich Carefully.

Have you gleaned any enduring lessons from Jim Cramer? Please share in the comments! 

Source:http://www.wisebread.com/11-pearls-of-financial-wisdom-from-jim-cramer?ref=relatedbox

5 Ways to Keep Hackers Away From Your Money

A Hacker

Start by rethinking your password strategy.

JPMorgan Chase, Domino’s, Home Depot, P.F. Chang’s, eBay — the list of targets continues to grow.

Information breaches that would have been difficult to fathom years ago are now common. And people are rightfully worried. After all, if the federal government can get hacked and its employees’ data stolen, how vulnerable is a personal account held at a bank or brokerage?

My friend Jack Vonder Heide, president of Technology Briefing Centers and one of America’s leading authorities on technology-related risks, says the image of cyber attackers as hipster kids in a basement hacking into websites for fun is a dangerous misconception. Cybercriminals, he says, are highly educated operatives of well-funded overseas groups, mostly based in China and Russia.

So what actions can you take to protect yourself in what feels like an endless battle to keep your data secure? Here are five steps to consider:

1. Diversify your passwords — and change them

For convenience’s sake, people often use the same password across multiple websites. Big mistake. It’s like giving an intruder a key that opens every lock. You want to make it extremely tough for a hacker to access your sensitive information. To create a different password for every financial website — brokerage, bank, credit card, mortgage account, and so on. Create unique password combinations that include letters, numbers, and, if possible, symbols. Establish a biannual schedule to change them. Security must be an ongoing endeavor.

2. Use an online password manager

All those hard-to-crack passwords can be a nightmare to try to store, recall, and keep secure, so use a reputable password manager. The best managers include password generators that create strong, unique choices. Most password managers allow you to sync your passwords across all electronic devices, making it easy to maintain multiple passwords. Select one that includes two-layer authentication for additional protection. Check out PC Mag’s best password manager selections for 2015. Many come with an annual fee — but they’re affordable and worthy protection against hackers.

3. Make life hard for crooks

Cross-shredding confidential documents, avoiding simplistic passwords, and keeping sensitive information off of unsecured channels like email are modest but effective actions. Thoroughly checking credit statements for suspicious activity and being aware of your surroundings when using ATMs are basic security measures that remain effective. Don’t let your guard down.

4. Check your credit reports at least annually

Periodically checking your credit report is a smart way to stay ahead of the bad guys — but many people don’t because of common misconceptions, such as the belief that you have to pay a fee to see your report, or you must subscribe to a service.

The fact is, federal law entitles you to a free copy of your credit report once a year from each of the three consumer credit reporting bureaus — TransUnion, Equifax, and Experian. You can get these reports at AnnualCreditReport.com. If you want to be especially vigilant, spread out your requests, so that you are looking at a different report every four months instead of all three at once every year. Increasing the frequency will help you catch suspicious inquiries earlier since credit activity customarily gets reported to all three bureaus.

The goal is to check for discrepancies, inconsistencies, and inaccuracies that might suggest identity theft. It’s not difficult to correct errors. The credit bureaus have improved their service and request response times. The Federal Trade Commission provides easy-to-follow instructions to dispute errors.

5. Keep your guard up when it comes to e-mails

Be wary of any email that requires you to click on a hyperlink to update a password or confirm confidential material. Such e-mails are often “phishing” expeditions seeking to scam you. They appear to come from your bank or brokerage firm, an online retailer — even the IRS.

The best rule to follow is that regardless of how real an e-mail looks, never click on such links. Contact the alleged sender’s customer service or fraud department directly to check the legitimacy of the email. Don’t use the phone numbers provided in the suspect email. Always use the contact information provided on your monthly statement or listed on the company’s website. It’s also advisable to forward the email to an organization’s fraud department.

What about inquiries from the IRS? That’s easy. The IRS does not initiate taxpayer communication through email or other electronic channels, period.

It’s understandable to feel helpless in the age of smart criminals who conduct endless assaults on privacy. But simply putting the threat out of mind is no solution. Nor is deciding that it can’t happen to you.

Personal Finance: 10 Ways to Become Financially Independent

After the 2008 economic crisis, many people assumed they would never be able to reach true financial independence – the ability to live comfortably off one’s savings and investments with no debt whatsoever.

However, individuals willing to use their time horizon to plan and adjust their spending, savings, and investment behaviors might just find financial independence is possible. Here are 10 ideas to get started.

1. Visualize first, then plan. Start by considering what your vision of financial independence actually looks like – and then get a reality check. Qualified financial experts can examine your current financial circumstances, listen to what financial independence means to you, and help you craft a plan. The path to financial independence may be considerably different at age 20 than it is at age 50; the more time you have to save and invest generally produces a better outcome. But at any age, start with a realistic picture of your options.

2. Budget. Budgeting (http://www.practicalmoneyskills.com/budgeting/) – the process of tracking income, subtracting expenses, and deciding how to divert the difference to your goals each month – is the essential first task of personal finance. If you haven’t learned to budget, you need to do so.

3. Spend less than you earn. It might be obvious, but it’s one of the most difficult financial behaviors to execute. Adhering to a lower standard of living and expenses will help you put more money into savings and investments sooner.

4. Build smarter safety nets. Emergency funds and insurance are rarely discussed in combination. The traditional definition of an emergency fund is a separate account for cash that can be used instead of credit to repair a broken appliance or other expenses that may run a few hundred dollars. However, many people keep insurance deductibles high to keep premiums low. Would you have enough cash on hand to cover an insurance deductible if you had a sudden claim? If not, build your deductible amounts into your emergency fund.

5. Eliminate debt. Though consumer debt levels have generally fallen since the 2008 financial crisis, the Federal Reserve Bank of New York reported in February that home, student loan, auto, and credit card debt began creeping up again in 2014. Getting rid of revolving, non-housing debt (http://www.practicalmoneyskills.com/costofcredit) is one of the most effective ways to free up money for savings and investment.

6. Consider your career. Financial independence doesn’t require you to quit a career you love, but you really can’t get to financial independence without a steady income to fuel savings and investments that will build over time. Speak with qualified advisors about your income, benefits, and retirement picture first, and see if you might be able to expand your sources of work-related income, such as consulting part-time. Also keep in mind that over the age of 50, the Internal Revenue Service allows you to make catch-up contributions to both 401(k) and IRA accounts.

7. Downsize. You’ll generally reach wealth financial goals faster if you can cut your overall living expenses. For some, that means selling your home and moving to a smaller one or to an area with lower living costs and taxes. You can also sell or donate property you don’t need and use those proceeds to extinguish debt or add to savings or investments.

8. Invest frugally. Become a student of investment fees and commissions because they can cut significantly into your principal. Make a full evaluation of fees you are paying on every investment account you have and if you’re working with a licensed professional who sells you financial products, know what fees they’re charging for their investment and advisory services.

9. Buy assets that generate income. Stocks, real estate, collectibles, or cash investments all have up and down markets. But do your homework and focus on investments bought at attractive prices that are likely to appreciate over time. Also, don’t forget to study the tax ramifications of any investment transaction you make.

10. Always know where you are financially. Financial planning isn’t about making one set of financial decisions and assuming you’re set. Lives and situations change and your financial planning must be flexible enough to withstand both positive and negative changes without derailing your hopes for financial independence. If your forte is not investment, financial planning, or tax matters, by all means, bring in qualified experts to help. But financially independent people generally have their money issues at their fingertips not only for their own use but for estate purposes as well.

Bottom line: Financial independence involves diligence and a bit of sacrifice, but even the smallest moves can yield big outcomes.

Source:http://www.yourhoustonnews.com/atascocita/opinion/personal-finance-ways-to-become-financially-independent/article_b723796d-0916-55e0-ad41-36cda386557d.html

3 Pearls of Financial Wisdom From Dave Ramsey

Between his best-selling books, radio show, and motivational speeches, Dave Ramsey has been giving solid personal finance advice for more than two decades. He takes a no-nonsense approach to manage money — just the way I like it — while offering advice that's practical, actionable, and guaranteed to put you on the path toward financial freedom. Ramsey's pearls of financial wisdom can help you get ahead and gain control of your finances. Here are three of my favorites.

1. Don't Worship Stuff

Many people grow up thinking they need the stuff to be happy. We often confuse our wants with our needs, and convince ourselves we "need" a big house, a fancy car, and everything else in between. The more we have, the more successful we feel. The problem, however, is that stuff costs money — money we might not have.

In his book, The Total Money Makeover: A Proven Plan for Financial Fitness, Ramsey nails it when he says, "We buy things we don't need with money we don't have to impress people we don't like." Ain't that the truth.

Some of us become so obsessed with keeping up that we sacrifice our future financial health and willingly go into debt just so others will think we're successful and can afford a certain lifestyle. However, the joke's on us because this type of thinking gets us nowhere financially — and fast.

The best thing you can do for your money is to stop worrying about the opinions of others and realize stuff doesn't make you happy or richer. Ramsey encourages "living substantially below your means." Just because you make $75,000 a year doesn't mean you have to spend $75,000 a year. Simplicity is the key to acquiring financial freedom.

2. Build a $1,000 Emergency Fund — Now

According to Ramsey, this is the first step to financial stability. This doesn't suggest you can't have more in your emergency fund. Like many other financial experts, Ramsey speaks about the importance of having a sizable cash cushion — at least three to six months of income. But since this takes time, Ramsey's Financial Peace University program recommends baby steps and starting with a $1,000 emergency fund.

This ensures enough cash to handle life's curveballs, so you don't have to rely on credit cards. This might come as a shock, but building a small emergency fund takes priority over paying off debt (although you'll still need to make minimum debt payments while growing a small emergency fund).

Do whatever you can to build this emergency fund. For example, sell stuff you don't need at a yard sale, work overtime, or get a side hustle. The idea is to fund this account as soon as possible. You'll enjoy peace of mind knowing you can handle an emergency, and it's only after building an emergency fund that you can start improving other areas of your personal finance.

3. Don't Be a Slave to a Lender

We live in a world where anything can be financed — from electronics to houses. And some people fall in the trap of thinking they can afford something as long as they're able to make the minimum payments.

Ramsey's financial philosophy revolves around living debt-free. He's a big believer in not carrying any type of debt, including an auto loan and a mortgage. In fact, he says he would rather ride a bike than take out a car loan.

In his book, Financial Peace Revisited, Ramsey says, "We want it all, and we can borrow to get it all before we can afford it all." For some, getting a loan or credit card has never been easier. But the more debt you have, the more you have to work, and the less money and time you'll have to enjoy your life.

Once you have a small emergency fund, Ramsey says it's time to tackle your non-mortgage debt. Not just your credit card debt — all of your debt. He feels that debt-free living isn't just about paying off revolving debt but also paying off student loans and car loans.

He recommends the debt snowball method, in which you pay off your smallest balance first. You'll make large payments toward this debt every month while making the minimum payments on all your other debts. After you get rid of the smallest balance, take the money you were using to pay off this balance and apply it to the next smallest balance, and so on. You'll eventually pay off your debts, at which point you can start increasing your $1,000 emergency fund, aiming for three to six month's worth of income.

After paying off debt and building a "real" emergency fund, Ramsey puts the focus on your mortgage and encourages paying off this debt as fast as you can. Becoming mortgage-free might feel like a stretch, but since you don't have other debts hanging over your head, you're able to increase your mortgage payments without breaking a sweat and pay off this debt year sooner.

That's the American dream if I've ever heard of it.

Source:http://www.wisebread.com/3-pearls-of-financial-wisdom-from-dave-ramsey

The 5 Best Pieces of Financial Wisdom From Ben Bernanke

There's no such thing as a free lunch.

Particularly when it comes to getting a few hours of Ben Bernanke's time. The former chairman of the U.S. Federal Reserve charges from $200,000 to $400,000 for speaking engagements at private equity firms, hedge funds, banks, and trade associations around the world.

However, "Helicopter Ben" (also known as "Bernanke") has made a few pro-bono appearances and speeches in which he provides some great advice on financial matters. Here are the five best pieces of financial wisdom from Ben Bernanke.

1. Be Smart About Student Loans

Student loans are a key issue for Millennials, so it's not a surprise that the topic came up during a speaker event at the Romain College of Business in March 2015.

Chasing a college degree is a two-edged sword for many Americans. On the one hand, workers with a bachelor's degree earn about $1 million more in their lifetimes than those with just a high school diploma. On the other, in 2014 college graduates owe an average of $33,000 in student loans.

"People have to be smart about how much money they take out," Bernanke recommends to young people. This short piece of advice is very powerful for retirement planning reasons. Your initial employment years are key for retirement savings because money invested then has the most time to take advantage of interest compounding. If student loan payments are preventing you from maximizing retirement savings, you're at a disadvantage.

Bernanke points out that you must find and talk with a student loan adviser on a regular basis. Remember that education is an investment, so that means it must provide returns. Keep student loans in check, live a frugal lifestyle during your college years, and choose your major wisely. (See also: 20+ Freebies for College Students)

2. Remember Money Isn't Everything

During a graduation speech at Princeton, Bernanke gave this suggestion to the class of 2013: "Remember that money is a means, not an end."

He wasn't trying to convince you that money doesn't matter. He is aware that there are many of us that don't have enough of it. Instead, he was suggesting to avoid making big decisions purely based on money. The perfect example is choosing a career.

More than half of Americans are dissatisfied with their jobs. While workers making more than $125,000 are the happiest with their jobs, there are still about 35% of them who are dissatisfied.

How can this even be possible? Turns out that the two criteria that make people happiest at work are non-monetary. "Interest in work" and "people at work" were chosen by 59% and 60.6% of workers, respectively.

Bernanke is right in warning that choosing a career based only on money without consideration of love for the work or desire to make a difference is a recipe for unhappiness. Give appropriate consideration to these factors, as well.

3. Evaluate If Annuities Make Sense for You

During his four-year tenure as Federal Reserve Chairman, Ben Bernanke had one of the toughest financial jobs in the world.

So, it's no surprise he kept his investments simple. His two largest assets are two annuities, TIAA Traditional and CREF Stock Large Cap Blend, each valued at between $500,001 to $1,000,000 as of 2007.

High net worth individuals, workers close to retirement age, and workers with a late start in the retirement saving race could all benefit from owning annuities for four reasons.

• Like with other retirement accounts, all monies contributed to an annuity grow tax-deferred until they are withdrawn at retirement age when you're more likely to be in a lower tax bracket.
   
• Unlike other retirement accounts, annuities have no contribution limits. This means that high net worth individuals could put away more for retirement than the $18,000 limit set by the IRS.
   
• Immediate annuities allow workers close to retirement to stuff away more money in their nest eggs and start receiving distributions after a short period of time.
   
• Some annuities offer a guaranteed stream of income, which is key for those close to retirement age or who have a very low tolerance to investment risk.

Owning annuities isn't for everybody, but evaluating whether or not annuities should be part of your retirement planning definitely is. Talk with a financial advisor to learn more about these financial vehicles. (See also: Don't Know What Annuities Are? You Might Be Missing Out)

4. Improve Your Financial Literacy

"Financial education supports not only individual well-being but also the economic health of our nation," said Bernanke during a teacher town hall meeting in 2012.

Low financial literacy is an issue for Millennials. According to a survey from FINRA, only 24% of them are able to correctly answer four or five questions on a five-question financial literacy quiz. While Millennials are offered courses in financial education in high school and college, or by an employer, only 61% of them participate in those courses.

However, Millennials aren't the only ones in dire need of improving their financial education. More than a fifth of Americans think that winning the lottery is the most practical way to accumulate wealth.

Bernanke advises us to improve not only our own financial literacy but also that of our children. He recommends that our focus shouldn't be on memorizing financial products or calculations, but learning essential skills and concepts necessary to make major financial choices. For example, to shop around for a loan to get the lowest interest rate and to start saving early for retirement. (See also: 10 Investing Lessons You Must Teach Your Kids)

5. Minimize Costs

When discussing rising gas prices and their effect on the American worker, Bernanke said: "it must be awfully frustrating to get a small raise at work and then have it all eaten by a higher cost of commuting."

This piece of wisdom is applicable to several financial scenarios.

• If you were to invest $5,000 in the average actively managed U.S. mutual fund, you would pay $66 in management fees. On the other, you could pay just $8.50 in fees by investing the same $5,000 in the Vanguard Total Stock Market Index (VTSMX) fund. Over a 30-year period, that difference would give you an additional $4,692.21, assuming a 6% rate of return.
   
• When putting down less than 20% of the price of a property, you have to pay PMI on your mortgage. In 2014, the average PMI payment ranged between $775 and $1,551 per year. By saving enough for a 20% down payment to buy a property, you could avoid the PMI expense.

Whether it's the sale price of your home or the size of your nest egg, you can't always have full control of the returns of your investments. However, you always have much more command over the cost of your investments and purchases. Minimize any type of fees so that you give your investments a better fighting chance.

What are other great pieces of financial wisdom from Ben Bernanke?

Source: https://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-ben-bernanke