BUDGETING:
Organizing your finances is the first step to creating wealth. Credit cards, bank accounts, personal loans, brokerage accounts, mortgages, car loans and retirement accounts should be tracked. Budgeting software can provide complete solutions to track all such accounts, make on-time payments and more. “Once you enter your accounts and balances into budgeting software, you will be able to spend less time getting organized and more time making sense of your situation.” Mint.com or quicken.
SAVINGS:
Spend Less Than You Earn
- Personal financial software provides powerful tools to help you track and budget your spending and take steps to achieve your long-term goals. If you learn to track your finances and know where you spend the most, you’ll be able to control your money. “The best way to ensure that you either overcome debt or avoid it in the first place is to never spend more than you make,
INVESTING:
Put Your Money to Work
- Take advantage of the time value of money. : “A 21-year-old who invests $17.50 a day until retiring at the age of 65 at a 5 percent average annual investment return can be a millionaire. At age 30, the required daily savings amount almost doubles. At age 40 the amount quadruples.” So save early and often, even if the amount is small.
- The key to understanding return on investments is that the more you risk, the better the return should be. This is called a risk-return trade-off. Investments like stock and bonds that have a higher rate of return often have a higher risk of losing the principal that you invested. Investments like certificates of deposit and money market accounts with a lower rate of return have a lower risk of losing principal. Since no one knows the future, you cannot be 100 percent sure any investment will do well. “If you diversify your investments, one can go sour without severe impact to your overall portfolio.”
- Find creative ways to diversify your income. Everyone has a talent or special skill. “Turn your talents into a money-making opportunity. Investigate ways to make money from home and launch a home-based business,” Get in your grind ….get the side hustle up. The extra income can supplement your full-time income or even result in an exciting career change. Good financial management software can show you how even a slight improvement in income can positively change your financial profile.
- Employment benefits like a 401(k) plan, flexible spending accounts and medical and dental insurance yield some of the highest rates of return that you have access to. “Make sure you are taking advantage of all the ways benefits can save you money by reducing taxes or out-of-pocket expenses,”
- Financial planning software helps you manage your tax information. For example, Quicken or Mint quickly analyzes taxable investments and provides powerful organizing tools that make year-end tax filings go much smoother. Let’s be real .. “We all know that any money you make is going to be taxed. That is why it is important to consider the related tax implications for every investment.”
CREDIT:
Limit Debt to Income-Producing Assets
- With credit cards and car loans, every penny you spend to repay that debt is money flushed down the drain. All but a few models of cars depreciate to zero and require more in repairs and finance charges than can be reasonably expected to be returned to the owner upon being sold. , “With their ultra-high interest rates, credit cards utilized to buy household goods and clothes that quickly wear out are bad bargains. If you have to be in debt, stick to financing items that retain their value over time, like real