Five Money Rules to Follow for Financial Success4 min read
Five Money Rules to Follow for Financial Success
Money matters are a serious source of stress for the average American individual and family. Financial stress is a 24 hour a day, 7 day a week problem. Managing your money can definitely be overwhelming, especially with so much conflicting advice out there to review and digest. The good news is, you don’t actually have to make huge moves to get your finances under control. You just have to follow a few simple guidelines to tackle your biggest money issues and reach some of your biggest financial goals.
Here are basic guidelines to help you on your path towards financial success.
Live Within Your Means
The ability to spend less than you make seems like a simplistic concept and it really is. By for many, it is much easier said than done. There are plenty of way to spend more than you make and many times we are our own worst enemy. You can easily find a way to buy more than your normal income would actually allow. There is absolutely no way to keep up or get ahead if you are spending as much or more than you are bringing in. Two ways to manipulate cash flow. You either have to make more money or you have to manage your expenses better. If you cannot get this part of your financial house in order, most other areas are also going to be negatively affected.
Have an Actual Plan
Like most things we do in life, having a plan of action greatly increases the probability of success. Winning the financial game is no different. If you know what you want, what you have to do to get there and how much time it is going to take, a lot easier to stay on course when you actually have a course. Goals are an essential part of the plan. If you do not know why you are saving money, the motivation to save that money will drift causing you to break from your plan. Another part of the plan should be to automate some of your spending and savings to put on autopilot so you can just forget about it and let things take care of themselves.
Eliminate Most Debt
Having and servicing debt is a sure-fire way imprison yourself, financially speaking. Consumer debt, like credit cards, is the type of debt that will prevent you from reaching your goals in life. During the working years, elimination of debt essentially gives you a raise because there is no longer the need to service the debt which means that money can go to work for you instead of against you. In the retirement years, getting rid of debt increases the standard of living in fixed income scenarios. Paying off credit card debt that’s several thousand dollars or more takes time, and it also takes discipline. Setting a goal of paying down debt in 60 months or less typically works best for most people. If you can get it done quicker, even better. Creating a budget and reducing your expenses will help you find the extra money you need each month to put toward paying down debt.
Save Money and Invest
The earlier you start saving, the more time you have to build up the funds to cover an emergency and reach your financial goals. On top of that, the earlier you save and invest, the more time your money has to grow and you can take advantage and put on your side simple concepts like the power of compound interest. Pay yourself first. Otherwise, you’ll realize you’ve spent what you intended to save. According to your budget, figure out how much you can save each month and have the money directly deposited into your savings account and other retirement accounts. Start investing, now! Money saved today is worth a lot more than money saved tomorrow.
Give Yourself a Chance
No one is going to do this for you and no one is going to care more about you and your future than you. The decision to take control has to come from you. The most important thing to understand about taking control of your money and ultimately reaching financial independence is that you are the only person who can make it happen. Once you understand and accept this you can start to have other people help and assist you with different parts of the plan and strategy. When you place a priority on you financial future, you will quickly find things you are doing well and some things you absolutely need to confront and change. Giving yourself the best chance at financial success means living a life that involves the right people, habits and behaviors. However, it all starts with you.