Remember when you were a kid, and you had grandiose aspirations? Maybe you wanted to be a princess or an aerospace engineer or whatever else you imagined, it sure as hell was rosy! But as you grew, reality began to set in, especially when you started to comprehend how poor finances could be a limiting factor.
As you accrue more debt, the future you envision seems to be receding. But this does NOT have to be the case. This is precisely why we will explore some financial tips that can take you towards the life you desire.
- Set Concrete Life Goals
You’d be amazed by the number of people who just move through the motions in life without any concrete vision of the future. Anybody you ask will tell you they want a better life, but if you nudge them to be more specific about what they want and how they intend to accomplish them, most people will go blank. How can you get to your destination if you don’t know where it is?
That’s why you have to set concrete life goals. Write out how much you want to have in a specified period from now. What would a good life mean to you by then? Maybe it’s having an early retirement when you’re 50? Writing down your goals makes it more likely for you to accomplish them.
Once you have that figured out, work backward to the present and set up milestones you need to surpass to accomplish those goals. Work hard and consistently to meet those milestones.
- Make a Budget
Many people do not make a budget because it seems redundant. However, it’s probably one of the soundest financial advice. Without a budget, there’s no mechanism to prevent you from unavoidable spending. That’s why you’re more likely to make spur-of-the-moment buying decisions. Those few tens and hundreds of dollars you spend wastefully can be put to better use that will make a greater impact for you.
- Pay off Credit Card Debt in Full
About 37% of U.S. households revolve credit card debts from month to month. Credit card debt is harmful to wealth-building because it is a high-interest loan. High-interest loans, in general, accrue more quickly than low-interest loans. That’s why you should strive to pay your credit card debts in full each month.
First and foremost, saving money is important because it helps protect you in the event of a financial emergency. Also, saving money can help you pay for large purchases, reduce your financial stress, avoid debt, have a better retirement, and provide you with a greater sense of freedom.
The best way to save is to make the process automated. Enroll in your employer’s retirement plan and make full use of other contribution benefits. An automated saving process eliminates the temptation to spend all your paycheck.
- Take Investment Seriously
When it comes to accumulating wealth, the power of compound interest makes investing one of the most viable means. However, with the possibility of bad stocks, lots of people are skeptical of investing.
Investing can become very risky when you become greedy. That’s why you should avoid stock-picking – unless you’re a financial sage, like Warren Buffet. Instead, invest in a varied portfolio like the S&P 500 that is guaranteed to turn in a decent return in the long term.
- Monitor Your Credit
In America, your financial life is directly impacted by your credit score. Your credit score will determine the interest rate, whether you want to take out a mortgage or an auto loan. Having a high credit score allows you to easily secure loans at the best possible rates.
The best way to improve your credit score is to pay your bills on time. Also, periodically monitor your credit report so you can dispute and correct inaccuracies before it severely impacts your credit.
- Live Below Your Means
Most people in America who overspend their income do so in one of three ways: too much car, too much house, or too much entertainment.
Therefore, do not take out a mortgage you cannot afford. It would only lead to financial strain in the long run. And having to lose your home due to foreclosure isn’t a funny sight. Similarly, do not purchase a car that’s way beyond your means just because you can easily take out an auto loan.
Watch the amount of entertainment or fun you indulge. Buying a $1,000 shoe or taking out a vacation might not the best financial decision based on your current situation. But these are some of the sacrifices you might need to make so you can have a more desirable future.
While these tips won’t take you to utopia, they would surely take you closer towards financial freedom, making it possible to live the life you desire.
Contact us today for more information. We look forward to hearing from you!