Do you ever find yourself looking at your friends and wondering why their financial life is so together, with none of the stresses you have? They pay all their bills on time, have a savings account, and are never worried about money. They even have the cash to take vacations, buy a house, and save for retirement. You can get in on the act too. With just a few basic strategies and discipline, anyone can be financially successful.
- Review Your Assets. First step is to know what you have. Make it a monthly or bi-monthly habit to review your checking and saving accounts, retirement accounts, loans and recurring bills. What are your assets—liquid and otherwise? What are your financial goals? Are you are on track to meet your goals? Having a clear picture of your financial worth will put your mind at rest and also keep you on track to meet the goals you have set for yourself.
- Budget, Budget, Budget. Budgeting is critical to financial success. But it only works, if you use it. Once a year, establish your financial goals and then create a budget based upon your anticipated income from all sources, minus your anticipated debts and recurring expenditures. Determine the adjustments that must be made in income or expenditures to meet your financial goals. BUT, this is not enough. You need to review your budget weekly. Are you on track with savings? Where is your money going? Will you meet your goals? Plug in everything. Quicken is great for this. Living in a digital world also helps. The end-of-year statements from your credit card company is an excellent resource for identifying all your charges. Keep track of your pocket money. A weekly review helps you to catch potential problems much sooner, so you can make the necessary corrections.
- Discipline. Financially successful people exercise restraint when it comes to spending. Try to distinguish between what you “need” and what you “want.” Those “wants” can add up after a while and eat away at your savings, totally derailing your financial goals. The main thing is to stay focused on what you want out of life, and do all that you can to ensure that you have the financial means to fulfill your dreams. When you find yourself with unplanned income, put it toward debt reduction instead of buying stuff. The sooner you arrive at a debt-free existence the more freedom you will have to indulge in splurges.
- Manage Your Debt. In an ideal world, we would have no debt. But it is virtually impossible. At the very least, you will have a student loan debt. To arrive at financial success, you must be focused on debt management and debt reduction. This means sticking to strategies that will reduce your debt penalties, such as paying off credit card accounts with the highest interest rates first. Take advantage of any special offers to consolidate or reduce interest rates.
- Increase income. Financially successful people have a balanced approach to improving their financial health: increase savings and increase income. Advocate for yourself at work. Negotiate the salary you deserve. Seek out that promotion, raise, or bonus. Freelance on the side if time permits. Or, if you have an entrepreneurial spirit, launch out on your own.
- Save for Retirement. If you are young and just beginning in the professional world, it may seem that you have plenty of time to think about saving for retirement. However, the longer you wait, the larger the percentage of your income that will be needed to meet your retirement needs. It is much better to begin early, stay steady, and make your retirement savings a priority. Take advantage of all the retirement plans that your employer offers and consult with an accountant or financial planner to be sure that you are fully invested in personal retirement accounts according to the maximum amount allowed by law.
- Invest in Yourself. Financially successful people recognize that their best asset is themselves. Take that extra income that came in and invest it in yourself. Pay for professional development classes to help you advance at work, or perhaps to open your own business. Or simply take a personal retreat to re-charge and focus.