Money can’t buy you happiness, but it can give you a sense of safety and security for your future. If you want to set yourself up for financial success and enjoy a comfortable future that doesn’t involve worrying about where the next buck is coming from, there are steps that you can take today. Let’s explore how you can take to ensure you make smarter spending, saving, and investment decisions.
Learn How to be a ‘Boring’ Investor
Investors who spend their days fired up and screaming at their computers are doing it wrong. Investing should not be exciting. It should be boring. Your portfolio should comprise of smart asset allocation and diversification within those asset classes. When this is the case, you won’t have to get excited over major market news or fluctuations in price, as you’ll have factored those changes into your holdings.
Ignore the Headlines
It can be easy to follow the herd and let headlines like stocks to buy now affect your decisions. Instead of taking impulse action, set up a list of penny stocks to watch and do your research on each option and examine the factors that are driving that market. To be a successful investor, ignoring these click-bait headlines and hype about the next big stock will be a key factor in your strategy. Spending your time listening to podcasts, reading financial news from reputable sources and watching videos will be much more beneficial.
Have a Budget
One of the most powerful steps you can take to gaining financial security is knowing where your money comes from and knowing where it goes. It’s impossible to track these figures without using a spreadsheet or downloading a budgeting app so find what works best for you and start tracking. In time, you’ll have greater control over your income and expenditure. You’ll be able to establish priorities and set realistic savings targets. You’ll be better prepared for financial emergencies and aware of any indictors that might suggest you’re getting into difficulty.
Avoid Unnecessary Debt
Do you have credit cards that you don’t really need? Are you thinking about taking out a loan to upgrade your car when the one you have is running perfectly? If so, it’s time to shift your mindset from getting into bad debt to pay for things that are unnecessary. Avoiding unnecessary debt is key if you want to enjoy financial success in the future. This means managing credit card balances, monitoring expenses with a self-imposed limit and restricting impulse buying.
Set up a Savings Account
Saving equates to financial security. This statement could not be more important. So, what kind of accounts do you need and how much needs to be in each one? You should have an emergency savings fund (will cover any necessary unplanned expenses), a retirement fund (401(K) or Roth IRA) and a sinking savings fund (will cover expected expenses such as car services etc.). How much you should have in each account will depend on your circumstances, your income and how many dependents you have. As a general rule of thumb, you should aim to have at least $1,500-2,500 in your emergency account, $2,000+ in your sinking account and you should be making a contribution of 15-20% of your household income to your retirement savings every year.
