9 Tips for Financial Success - What your grandmother would tell you about personal finance
Rizek Housari, CPA, CFP®
AUTHORS NOTE
Creating a custom financial model of your future gives you the framework and lens to make important financial decisions.
How to best mitigate and manage your tax burden is just one of the important decisions to consider.
At Divergent Wealth we are state-of-the-art financial planners and investment professionals who specialize in simplifying complicated things.
To create a complimentary customized financial plan, call us at 385-CFP-4000. For information, visit us at www.divergentwealth.com.
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Financial Independence. It's a mindset as much as a reality. It's the confidence that comes with building a financial plan, becoming disciplined to achieve your goals, and owning them.
Life happens. You cannot control everything. Each day you make choices regarding your money, how you spend your time, and where you focus your energy. Becoming educated on your financial plan will help you become more confident. The more you know, the better off you and your family will be.
This article highlights 9 critical principles of financial independence that your grandmother would tell you. She would want you to read this.
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There is a question that is not asked enough in our homes and schools: How do I become financially independent? Sound strategies for creating, maintaining, and growing wealth are not secrets held by Wall Street’s elite or whispered in Silicon Valley. Rather, building a strong financial foundation can begin today by taking a few simple steps. This article highlights 9 critical principles of financial independence that your grandmother would tell you.
Control Spending
Take control of your life and money! Continually spending money on frivolous items is exhausting and will deteriorate your ability to save. The world yearns to get a piece of your money. There are numerous methods of attracting your attention through commercials, social media ads, even your Google searches are monetizing you. Do not get distracted, save it! Putting away a portion for your future will allow you to take advantage of opportunities when they arise.
Reduce Debt
Debt can feel like bondage and the burden can often feel insurmountable. Become serious about breaking free from harmful debt. While not all debt is detrimental to your success, consumer debt can be the worst. There are two common methods for attacking this kind of debt. The first is tackling the highest interest debt. The second strategy is focused on paying off the smallest debt balance and working your way up. This is called the snowball effect. These small wins can be extremely motivating and give you the confidence to gain control over your bigger debts. Get control of where you are, live within your means, and you will find freedom.
Build a Reserve
Everyone has emergencies from time to time and being prepared financially can make all the difference. Liquidity is the real kicker here. Make sure your reserve fund is easy to access and not overly exposed to market fluctuations. Typically, investing your emergency fund aggressively is unwise. No one can consistently time the market, and neither should you when it comes to your emergency fund. Set aside enough cash for those rainy days in an emergency fund, and then you may invest the rest.
Invest Wisely
Saving money is great, but the real fun comes when your money works for you. There is no feeling like going to bed at night and waking up in the morning knowing that your money was hard at work. Using a combination of assets such as stocks, bonds, real estate, private equity, and other asset vehicles can help you achieve diversification and allow your wealth to grow. Investing should be simple and easy to understand. The important aspect is to make sure that you always understand where your money is going and how it is increasing. There are too many stories of people losing money with something they did not understand.
Contribute to Retirement Accounts
There are multiple types of ways to save for retirement. A few include an Individual Retirement Account (IRA), 401k plan, Health Savings Account, or an employee stock purchase plan, the list goes on. Be sure to take advantage of any beloved employer match. This is free money that your employer contributes to your plan, not doing so is leaving money on the table. Do not get overwhelmed. Having a partner, such as a financial advisor, can help you think through these choices and can make a real difference in your overall confidence for the future. Consistently contributing to retirement accounts can have wonderful long-term benefits.
Save for Your Health
Maintaining adequate insurance coverage for you and your family can bring significant peace of mind. Those with a qualifying high deductible health insurance plan are eligible to contribute to a Health Savings Account (HSA). This account enables you to invest your health savings, giving the funds the opportunity to grow into the future for when you need them. Your contributions are made tax-free, grow tax-free, and can be used tax-free for qualifying health and medical expenses. Consider the great tax advantages that contributing to an HSA could afford you by meeting with a financial advisor.
Learn and Develop
You do not need formal financial education to become an intelligent investor. Reading this article is already moving the needle in the right direction. With money, more is often said than done. The real learning comes as you begin acting and investing. Save and invest. Repeat this over and over until you find yourself in a position to do so much good in the world.
Love Your Neighbor
People who are constantly worried about money do not have the mental and physical ability to think of others. As you become financially strong you will innately desire to serve those around you. This may take many forms. You may find yourself with more time that you can give to coaching your child’s sports team, volunteering at a soup kitchen, or donating more to charity. You can make a real impact on the lives of those around you when you are financially independent. Sharing a portion of your resources with those less fortunate than you can leave a legacy and teach others to be wise stewards.
Recognize Reality
As you watch your investments grow you will naturally want to save and learn more. Eventually, this pattern will encourage you to share what you have learned with those whom you care about. Teaching others how to save and invest will give our communities greater freedom and opportunities. Often, not taking control of your money causes significant and widespread problems for families, the foundation of our communities. Choose to recognize reality and take steps to improve your family's life. Financial independence is worth the sacrifice.
CONCLUSION
Creating a custom financial model of your future gives you the framework and lens to make important financial decisions. Tax Planning is just one of the important decisions. At DivergentWealth®we are state-of-the-art financial planners and investment professionals who specialize in simplifying complicated things. To create a customized complimentary financial plan, call us at 385-CFP-4000. For information, visit us at www.divergentwealth.com.
The SCT Library’s mission is to cut through the clutter and the spin to deliver financial straight talk -- to simplify complicated things. These short guides will reduce complex topics to their core issues to assist in making the best financial decisions for your family.
DIVERGENTWEALTH® is changing the way people engage with advisors. They are a competent, dedicated, and credentialed financial partner should you ever decide that’s what you need. Experience the difference at www.divergentwealth.com or call to interview us at 385.CFP.4000.
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The information contained in this material is given for information purposes only, and no statements contained herein shall constitute tax, legal, or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the needs of an individual’s situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor.
Individual clients should review with their adviser the terms, conditions, and risks involved with specific product or services. Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.