Don’t Just Manage Your Money, Own It!
You earned it. Now learn how not to burn it. Getting a handle on your finances now is one of the most empowering things you’ll ever do for your future. At stake are the goals that really matter to you—and your ultimate financial freedom.
It all starts with understanding where your money is coming from, where it’s going and how to propel it in the direction you want it to go. Look up! Because that’s where your bottom line is heading.
That stops now! Let's get your future started!
- Step 1: Always be saving!
- Step 2: Discover a better way to bank
- Step 3: Learn how investing works for you
- Step 4: Prepare for the eventuality of retirement.
Advice to Manage Money By: Always be saving!
Here’s an awesome piece of advice: “a penny saved is a penny earned.” Grannie was right. Saving cents not only makes sense, it takes work. And it’s not just a Monday-to-Friday commitment, either. Opportunities to save major coinage can be found on each payday, at every cash register and deep inside every pocket. Saving can happen every day. All it takes is dedication and imagination.
We already know that turning your financial goals into reality requires three things:
- Debt management
- A rock solid plan
Successful money management comes from your seamless execution of all three of those things, at the same time. Remember, achieving the goals that are really important to you is a marathon, not a mad dash. It’s also a relay, won $10 (or even $5!) at a time.
So here are a few more pieces of advice:
- Always be saving, even if you’re paying down debt at the same time.
- Save one opportunity at a time to prevent putting a huge strain on your budget.
- Create opportunities to save…here are a few ideas to get you started.
- Don’t get discouraged. Like all journeys, there may be a detour or two. The best way is to get back on the right course and keep on trucking. We all make mistakes sometimes. What we learn from them is the key.
Now ask yourself:
- How much do I want to save? Establish your savings goals.
- How much do I need to save? Establish your emergency fund.
- What the heck is this? Establish what to do when a windfall comes your way.
Banking: Get the Biggest Bang for Your Bucks
People talk a lot of smack about banks, but the reality is we need them. Where else are you going to put your money? It’s a relationship like none other. One you should enter based upon mutual benefits and returns, security and, above all else, trust.
Your aim is not to find that one bank that fits all. It’s to find the bank that fits you.
When searching for yours, consider:
How much money can you really bank?
The more money you park at the bank, the more perks you should get, like free checking with interest. On the other hand, balances drop. Meaning that the fee-free relationship you signed up for could suddenly saddle you with strings attached.
What perks do you really need?
If you’re a cash and carry kind of person, free and/or reimbursed ATM fees are going to be important to you. Those with a hankering for all things digital are going to need an online bank that offers the full suite of mobile features, from apps to easy click payment transfers.
Banks that offer the real deal vs. banks that flirt.
There are plenty of fish in the sea, and a whole lot of banks trying to net them in with limited “offers”, “rewards”, “free” cash, and “bonus” merchandise. When looking for a long-term banking relationship, pay close attention to a bank’s regular terms and conditions, which might change after the initial sign-up period (i.e., honeymoon).
The bargaining power of your money.
If you plan on spreading your money across an array of accounts (primary checking, savings, CDs, money market, mortgage, credit, and so on), be sure to ask for the price breaks, discounts and perks you’re entitled to.
Are your needs being met?
If you’re already in a serious banking relationship, do your research, then decide: should I stay or should I go?
Now that you've taken all these factors into account, it's time to figure out:
- What’s your (account) type?
- How to make the most out of automatic debits and payments
- How to deal with fees and other surprises
Investing is for Everyone, Including You
Do you think investing is too risky, complicated or only for the rich? When it comes to risk, investing is a speculative endeavour. However, it’s not exclusively for people with more money than you, nor is it all that complicated.
Because the future is expensive. Consider the cost of education. People are living longer, too, which is great – but it equates to skyrocketing retirement costs. Granted, investing always carries the possibility of loss. But it also offers the possibility of growth – on a massively, compounded scale. Alternatively, keeping your assets in lower growth accounts leaves you more at risk of inflation getting the best of you down the road.
Can you afford to invest?
Investing is just one part of your master plan. Before you start dabbling in the markets, determine your net worth by comparing your assets with your liabilities. Your income versus expenses…input and output.
Why invest? Because the future is expensive.
- Step 1: Hire a professional. A financial professional, like a CPA, can help you define your investment goals and objectives, determine the level of risk that's right for you and create a comprehensive financial plan.
- Step 2: Allocate your assets. Keep your savings separate from your investments. The former are kept in certificates of deposit (CDs), checking accounts and savings accounts. The latter are beholden to the markets, fluctuating up and down, paying out interest and dividends – or nothing at all. Investments live in stocks, bonds, mutual funds, collectibles, precious metals and real estate.
- Step 3: Understand your options. Financial management takes work. Rarely are dollars truly out of sight, out of mind. Nor should they be. Stay on top of where your money is by keeping good records and recalculating your net worth annually. This will help with tax planning in the immediate future and give you a picture of how your investments are performing over time.
Because One Day, You’re Going to Want to Retire
You only get one shot at saving for retirement, as in now. It might not feel like it, but the future is hurtling towards us at the speed of time itself – and time can be a relentless thing. When it catches up with you, Social Security might be a thing of the past; pensions may be as extinct as dinosaurs; and you could very well live to 100 or beyond (with no income to speak of).
It’s a scary thing, that ticking clock. But time is also your biggest ally.
Thanks to the mathematic marvel that is compound interest, the abundance of retirement planning tools available to you, and your new found sense of financial realism, the future is now a thing that can be faced with confidence.
Let's get started.
- Step 1: Establish Your Retirement Needs and Goals. With so many immediate goals in front of you, determining retirement needs might feel rather abstract. But it’s critical to set a baseline. It begins with a modest percentage of your income.
- Step 2: Start Funding. Now that you’ve determined what percentage of income you’ll need to save to fund your retirement, it’s a matter of putting it in the right place. Here are the most powerful retirement accounts out there.
- Step 3: Put Some Thought Into the Unthinkable. The future is full of uncertainty. However, there is one inevitability we all share in common. You might not have a lot, but you will need these documents to protect your estate, your family, and your finances.