11 Simple Financial Tips You Should Have Followed 30 Years Ago

"Boy, if only I had found you guys 20 or 30 years ago. I would be all set!"

I hear some variation of that comment all the time from members of our Motley Fool community. Sadly, we can't turn back the clock and do things right. We can, however, teach the younger generation to avoid making our mistakes.

With that in mind, I created a handy, one-page financial checklist that will allow everyone to build their wealth over the long term. If you follow this simple advice, you'll be on the road to financial freedom. Best of all, you'll have no regrets in the future about your financial condition.

1. Pay yourself first.
That's a fancy way of saying you need to get in the habit of saving a portion of your earnings early on in life. It's probably the biggest single predictor of financial independence for you in the future.

2. Invest your savings smartly.
(A) First, make sure you set aside about three to six months of living expenses. Keep it in cash for unexpected events.

(B) Consider contributing to your 401(k), at least until you max out the company match.

(C) Consider opening a Roth IRA next.

(D) If you still have money left, you can go back to your 401(k) plan, if it's a good one. If you don't like your investment options, open a discount brokerage account.

3. Create a portfolio for all seasons.
Your plan for portfolio allocation shouldn't change with the investing environment. You will want a plan that you can stick to through thick and thin.

(A) A good rule of thumb for deciding what percent should be in stocks is to subtract your age from 110, the remainder should be in bonds. If you're 40 years old, that means you'd have 70% in stocks and 30% in bonds. Depending on your individual tolerance for portfolio volatility, you may deviate from this rule, but it's a good starting point.

(B) Only invest in stocks if you DO NOT need to touch that money for at least five years. If you need the money before, then you can opt for CDs or just plain old cash.

(C) If you aren't interested in managing your investments, consider choosing a target date fund or an index fund.

(D) Avoid high-fee funds with loads.

(E) High-yielding dividend stocks and REITs are good candidates for tax-protected retirement accounts.

4. Be an educated shopper of financial services.
Before acting on any advice ask your financial professional these two questions:

(A) How do they get paid for the advice they provide?

(B) Are they personally invested in whatever they've suggested?

If you're uncomfortable with the answers to those two questions, seek help from someone else, preferably a fee-only financial advisor or from a referral from someone you respect.

5. Buy term insurance.
You need insurance the most when you have small children. So, get enough insurance so that in the event of your demise and loss of income, your estate can pay off your debts, including your home, and cover your children's expenses through their college years. In the great majority of cases, term insurance is your best bet.

6. Avoid McMansions.
Don't buy a home unless you plan to spend at least seven years in that area. And you don't want to be house poor, so don't spend more than 300% of your gross household income on a home. A good price to pay is around 150 to 200 times the monthly rent of a comparable property.

7. Be responsible and check your beneficiaries.
Make sure you have an up-to-date beneficiary listed on your retirement accounts.

8. Roll over that 401K to an IRA.
If you switch jobs, avoid the temptation and penalties associated with cashing in that account. Instead, roll it over into an IRA.

9. Spend a few hundred bucks on these three important documents.
If you're an adult with substantial savings, you need to have a professional draft these three documents. These are really important, so we don't recommend using an online form:

(A) A will

(B) Durable power of attorney

(C) Living will

10. Start your own business early in life.
This may seem like an odd suggestion. The reality is that most people will learn far more about life and investing if they've operated their own business. It doesn't need to be a huge financial success in order for you to learn a set of skills that will benefit you for a lifetime.

11. Create a diversified, self-reflective portfolio.
(A) A basic portfolio should contain somewhere around 15 to 25 positions. We like the idea of buying in thirds. If a full position is 6% of your portfolio, you'll buy 2% at a time. Be sure to keep your trading costs below 2%.

(B) Consider 10% as the maximum position size when buying a stock. And no more than 30% of your portfolio should be in a single sector.

(C) Your portfolio should say something about you. A great place to search for potential investments is to track where you like to spend your discretionary money.

A new year is a great time for all of us to get our financial houses in order. Hopefully, the above list provides some helpful guidance. Here's to a safe and prosperous 2014. Happy investing!

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Some bonus investing advice for 2014 
The Economist  compares this disruptive invention to the steam engine and the printing press.  Business Insider  says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. Watch The Motley Fool's  shocking video presentation  today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these 3 stocks.  Click here  to watch now!

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