As many know, I’m big on investments and money management. In my internet travels today I came across an article that I figured most of my readers could use. Below are 5 of the 10 steps. The other 5 are on the link at the end. Many people are a few good habits away from fiscal responsibility and Financial Freedom. Start Now.
1. Set The Goal
Nobody plans to fail, but plenty of people fail to plan. It’s a cliché, but it’s true. “Plan” is the leading self-help advice from athletes, business moguls and everyday people who have achieved extraordinary goals. Read Plan To Retire Rich for additional insight into how to develop a course of action to achieve your goals.
2. Start Saving
If you don’t save, you’ll never reach your goal. As obvious as this might seems, far too many people never even start to save. If your employer offers a 401(k) plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your paycheck, increasing your savings and decreasing your immediate tax liability. Furthermore, if your employer offers to match your contributions up to a certain limit, be sure to contribute enough to get the full match. It’s like getting a guaranteed return on your investment!
3. Get Aggressive
Studies have shown that the majority of the returns generated by an investment are dictated by the asset-allocation decision. If you are looking to grow your wealth over time, fixed-income investments, or a certificate of deposit (CD) aren’t likely to get the job done, and inflation can take a big chunk out of your savings.
4. Build A Rainy Day Fund
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can’t avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do. Read Build Yourself An Emergency Fund to help structure your finances to avoid financial disaster.
5. Increase The Amount You Save
Your income should rise as time passes. You’ll get raises, you’ll change jobs, and maybe you’ll get married and become a two-income family. Every time more cash comes in to your pocket, you should increase the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can. Read why it might not be better for one spouse in a two-income family to leave work in Consider The Outcomes When Cutting An Income.