7 Keys to Financial Success
It is easy to stray from basic, solid principles of finance. These remain true no matter what your age or circumstances. To make it easy, here are seven keys to fulfilling your financial vision of a steady tomorrow.
Consider each one closely. They should be ingrained in your brain. You need to continually read and practice them.
1. Pay yourself first. Make saving for your future a first priority, which you put before your other financial obligations. Put away as much as you can, and try to save at least 10% of your annual income (total, not take-home). Depending on your obligations, you may be able to save more or less. The more you save, the more wealth you create – but something is better than nothing.
2. Always maintain a long-term perspective. Since building financial assets is a marathon and not a sprint, day-to-day fluctuations in the stock market won’t have as much bearing on your long-term goals as you might think. Unless your retirement is near, give yourself a break by avoiding daily stock news.
3. Invest with a plan. If you do not have a plan, you may be tempted by every latest, greatest investment alternative. Hearing about a supposedly good deal does not necessarily mean it is the right investment to help you meet your goals.
4. Keep it simple. If you can’t explain an investment to another person, then you probably should avoid it.
5. Don’t turn down free money. If your company offers a 401(k) or retirement savings plan with an employer match, make sure to take advantage of the program.
6. There is no such thing as a free lunch. There is always risk where there is reward. The higher return you expect, the higher risk you take.
7. Diversify. Don’t tie up all your money in just a few investments. This could put achieving your vision at risk.
I’m a fan of printing quotes and phrases on Post-Its and sticking them around my computer screen. A few of the principles above are dangling from my monitor right now. Feel free to do the same – or add your own basic principles to something you frequently look at. The more you commit them to memory, the better prepared you’ll be when the need for a financial decision arises.
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Marc C. Shaffer, CFP, AIF, EA, is a principal of Searcy Financial Services, Inc., a registered investment advisory firm in Overland Park, Kan. For more information, visit www.SearcyFinancial.com. Follow us on Twitter: @SearcyFinancial.
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