ALL THE REASONS YOUR FINANCIAL WELL-BEING IS TERRIFYING! ———TIME TO FIX IT!
FINANCIAL LITERACY
Read: FINANCIAL LITERACY IS JUST NOT THAT COMPLICATED – TRUST ME!
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BUDGETING
Read: Do You Want or Need a Cadillac?
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HTTPS://wealthbuildingpowers.com/2018/01/23/DO-YOU-WANT-OR-NEED-A-CADILLAC/
Calculate how and what you spend your money on now and then figure out how to put more of YOUR HARD EARNED MONEY TO WORK – WHILE YOU SLEEP! Track your spending and see where your money is actually going because you will see opportunities to save money up to hundreds of dollars per month.
If you pay for most things by credit or debt card, simply review your last four months of charges. Identify those expenses you can live without. Will you ever use that gym membership? How many television channels can you watch? Can you use the “share a ride” feature on Uber or Lyft sometimes? Your bar tab was how much!!
As for you cash payers, (I do not understand why anyone pays cash. To be honest it disappears out of my wallet faster!) you have to keep daily records (that’s right-either write it down (BORING) or face it is 2019 and get a FREE budget app) and track how much money you spend and for what. Also, include your vacations and holidays spending plans in your budget calculations, utilizing the amounts you spent previously or plan to this year.
If you find yourself spending more than you take home {MAJOR NO-NO!} or want to increase the amount you put towards debt or savings, see if you can reduce any of your expenses that are WANTS (Netflix, HULU, Apple TV, Disney TV, Cable, Starbucks, lottery tickets beer-sorry, etc.) versus NEEDS (rent, gas, food, water, utilities, etc).
PROTECT YOURSELF
Review your credit and bank statements monthly looking for errors. To protect your credit, check your credit reports minimum annually. Each credit agency must give you a free credit report annually. Dispute all errors you identify. Set as many of your bills on auto pay; place a FREE Security Freeze on your credit reports. This keeps theives from using your social security number to open credit. Sign up for free credit monitoring on sites like Credit Karma and Experian.
GET RID OF ALL HIGH INTEREST DEBT
Read: FREEZE – HANDS UP AND DROP THAT CREDIT CARD!
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HTTPS://wealthbuildingpowers.com/2018/12/13/FREEZE-HANDS-UP-AND-DROP-THAT-CREDIT-CARD/
If you have debts with interest rates six percent or worse, consider refinancing with lower interest credit card balance transfers or home equity loans. As you pay off debt use those extra dollars from your pay, to increase monthly payments on the next highest interest rate debt.
Once you pay your credit card debts off, only spend on a credit card what you can afford to pay off each month. Credit card companies make billions of dollars in profit. Your goal is to NOT help them! Congratulations when you get your debts paid off – FOR GOOD!
EMERGENCY SAVINGS
Read: GOVERNMENT SHUTDOWN DEMONSTRATES WHY EMERGENCY SAVINGS IS NOT A WANT BUT AN ESSENTIAL NEED!
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If you don’t have enough savings to cover six months of necessary expenses, set up an automatic monthly transfer to your emergency fund of whatever you can afford to save.
ACHIEVING RETIREMENT FUNDING GOALS
Read: SMART PEOPLE (AND THE IRA) ARE INCREASING 2019 401-K, IRA, ROTH IRA OR SEP CONTRIBUTIONS/LIMITS
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SMART PEOPLE (AND THE IRA) ARE INCREASING 2019 401-K, IRA, ROTH IRA OR SEP CONTRIBUTIONS/LIMITS
If you have a 401-K plan that matches, you MUST contribute enough to gain that match. You cannot afford to give away FREE MONEY any more than free whatever your passion is!! Now that you have paid off high interest debt, and better controlled your WANTS, drive your savings rate up to 20% or more of your income. Now I know you are thinking- There he goes again-with an impossible target. Note, I did NOT specify a time for achieving 20% savings. Your end target is 20% or more savings. If you have to start with one percent, congratulations, YOU STARTED! I did not start out of college at 20% savings, but grew my percentage annually.
Utilize your 401-K, IRA, ROTH IRA and other Savings vehicles. The advantages, YOUR HARD EARNED MONEY grows tax-free. An advantage of the ROTH accounts, as you are contributing after tax dollars, you NEVER EVER pay taxes on that money again.
Let’s look at a quick example to show the value of a ROTH. If you qualify to contribute the maximum $6,000 per year in your ROTH account and assume a seven percent annualized return, in 30 years you will have ~$614,000 that you owe zero dollars on when you start withdrawing this money after the age of 59.5. If you can do this for 40 years, you will have ~$1,320,000. What if you are married and your spouse does the same? This is how you grow wealth. Start early and make continuous contributions to your savings!
EDUCATION FUNDING GOALS
Read: DO YOU LOVE YOUR ADULT KIDS? IF YES – HELP THEM TO A STRONG FINANCIAL START IN LIFE!
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DO YOU LOVE YOUR ADULT KIDS? IF YES – HELP THEM TO A STRONG FINANCIAL START IN LIFE!
If you have children and cannot afford to pay $500,000 to buy them into a top university, they likely cannot earn a degree from —————Whoops OFF TOPIC!
To save for legal education expenses, you can start contributing to tax-advantaged education accounts like a 529 plan.
The very FIRST thing you and your children do is look into scholarships, financial aid and apply to affordable colleges. Get a degree in something you can get a JOB! PLEASE!! Graduating with a degree in the Spiritual Realization of The Color Blue (my favorite color by the way) and ending with a debt of $150,000 and working at Starbucks or driving Lyft is JUST WRONG! I hate seeing YOUR HARD EARNED or BORROWED DOLLARS – WASTED!
INVEST WISELY
READ: The Difference in a Mutual Fund Charging 0.25% fee versus 1.0% fee, over 30 years, will shock you.
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HTTPS://wealthbuildingpowers.com/2017/12/28/THE-DIFFERENCE-IN-A-MUTUAL-FUND-CHARGING-0-25-FEE-VERSUS-1-0-FEE-OVER-30-YEARS-WILL-SHOCK-YOU/
We all need to know our limitations. Majority of us, I include myself, are lousy at picking stocks. I have purchased more lemons than needed for a 55-gallon jug of lemonade! We buy when there is a buzz and everyone is telling you, Wal-Mart is HOT and shortly after that lose 50%. Or we buy GE thinking great, a guaranteed dividend and next GE loses 75% and they cancel the blasted dividend payments. But rest assured the CEO of 16 years who destroyed that company is in the top one percent and set for life! Can you tell I owned GE stock for over a decade! Yes I’m ANGRY!!
What if you could bet on a country? Which country would you put your money behind? I have worked/visited about 30 countries. Some, actually most, I would not bet a dime on! I believe the best country to live and bet on is the United States of America.
“America is still the most prosperous nation the world has ever seen. We are blessed with the natural gifts of land; all the food, water and energy we need; the Atlantic and Pacific oceans as natural borders; and wonderful neighbors in Canada and Mexico. And we are blessed with the extraordinary gifts from our Founding Fathers, which are still unequaled: freedom of speech, freedom of religion, freedom of enterprise, and the promise of equality and opportunity. These gifts have led to the most dynamic economy the world has ever seen, nurturing vibrant businesses large and small, exceptional universities, and a welcoming environment for innovation, science and technology. America was an idea borne on principles, not based upon historical relationships and tribal politics. It has and will continue to be a beacon of hope for the world and a magnet for the world’s best and brightest.”
Besides the fact we have a former VP, Uncle Joe, who hugs, kisses the top of ladies heads and cannot seem to keep his hands off females and kids, the US is still a GREAT place to put your hard earned money betting the US economy will continue to grow.
Warren Buffett supports this bet and recommends putting your HARD EARNED MONEY into an S&P 500. I personally invest in the VOO – Vanguard S&P 500 ETF fund. If you desire diversification you can add an International ETF and a Bond ETF. Many 401-K plans also offer target date funds based on when you plan to retire.
Whatever, you choose, Keep It Simple. Select low cost funds (fees). Discuss your plans and options with a financial planner you can trust.
CONCLUSION
April is Financial Literacy month. To achieve anything great we must turn it to a habit until it becomes ingrained in who we are and even better we find joy in doing it. I am working on improving my health and have adopted a daily routine. After breakfast I go upstairs and exercise for an hour or more. To make this enjoyable, the only time I allow myself to look at Netflix is when I exercise. I sometimes found myself exercising for two + hours because I wanted to see the next episode!
Building Your Wealth requires discipline and repetition. You have to get in the habit of spending less than you make. Get in the habit of safely investing your Hard Earned Money. It’s a lifelong process of continual growth and adaptation that begins with a simple step.
Let’s get ready, get set and GROW YOUR WEALTH!
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DISCLAIMER
I am a proud nerd (my beautiful wife and daughter told me so) investment and finance blogger, with University Rutgers, MBA and Harvard University, Advanced Management education.
I started my first business at ~13 years of age. I am a successful investor in equities and real estate and happy to share my personal finance and investment lessons learned with you. I am NOThowever, a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or financial advisors.
