- Plan for the unknown. Create an emergency savings fund to cover all of your monthly bills and expenses for 12 – 18 months. This is your backup plan so that if a financial crisis occurs you have money to pay the costs and it prevents you from going into debt. Use what-if scenarios - have a plan A, B, C and D for unexpected events that may occur.
- Do better than your parents. Open an IRA and save at least 10% - 20% towards your retirement each month. Start contributing with your first job. You will need 70-80% of your current retirement salary for 20 – 30 years to have enough money to cover bills and living expenses during retirement. Plan for your grandchildren’s retirement. Save more than you think you need to ensure you have enough for retirement.
- Don’t be afraid to take risks. Become a homeowner while you are still single, start a business while you are single or don’t have children yet, become a franchise owner or invest in risky stocks. Your risk tolerance decreases as you get older so take some financial risks while you are young and have more years to recover. Warren Buffet lost 50% of his wealth at an early age but regained it and then some.
- Peer Pressure. Avoid peer pressure from your co-workers, family and friends. Many adults find themselves pressured into a lifestyle that requires them to give their family more and buy things they can’t really afford. This behavior results in financial disaster.
- Co-sign. You can’t control what other people do. When you co-sign for a loan or credit card you are basically saying you will pay for the item because most people don’t feel obligated to pay something back unless their name is the only one on it.
- Ensure yourself and your stuff. Protect yourself by buying health, life, disability, long-term care. Buy homeowners, renters, car, fire, flood or other insurance to protect against loss or harm. Most people go into debt due to lack of health insurance or other insurance. Review policies yearly and keep beneficiaries up-to-date.
- Debt. Pay off debt as soon as possible. Pay off your mortgage before you loan term ends. Pay off car loans early. Keep credit card debt at 20% or less of the credit limit.
- Leave it alone. If you have money in a savings account, CD, money market account of retirement account leave it alone. Money is like a tree, if you take care of it will grow forever, it you touch it, pluck leaves and branches off of it , it starts to wither and die.
- Hire a professional. If you are not an expert with managing your money then hire an expert. We hire a doctor, lawyer, mechanic or therapist to take care of us but refuse to hire an expert to help us take care of our money.
- Automate your finances. Get organized and automated your finances. Use tools to help track your money and pay bills online or use automatic paycheck deduction. This will prevent you from paying late fees and help you easily keep track of your money.
- Keep Uncle Sam happy. Pay your taxes. Many celebrities have lost property or gone to jail because they did not pay their taxes. Each quarter or every six months do a check to see if you have paid enough taxes; adjust your withholdings or set aside money each month so you don’t have to pay a large tax bill at the end of the year.
Saturday, September 28, 2013
11 Ways to Gain Financial Success
"You see things and you say why? But I dream things that never were, and I say Why not?" by George Bernard Shaw or "Success is creating a state of mind that allows you to obtain anything you really desire." by Mark Victor Hansen. I love these success quotes.
The definition of financial success varies from person to person. There is no magic number because every person’s situation and needs are different. However, basic financial success is having enough money to pay for basic necessities and bills and having money left over to pay for things you want or need such as going on vacation, home and car repairs, paying for your children’s college education, money for unexpected expenses, money to help you plan for retirement. Financial success is ultimately about how you spend your money. It involves creating and achieving your financial goals, being content with what you have and not comparing yourself to others.
Financial success is being totally in control of your finances. Financial success is not showing your success and using discipline with your ego. Poverty and financial success starts with a mindset – either negative or positive. Financial success involves having a positive mindset and is not based on your income, how many properties you own or whether you make the Forbes List. Financial success is continually practicing good financial habits throughout your life. Use these 11 practical methods to help you gain financial success.