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TIP--THE ROAD TO WEALTH STARTS WITH GOOD HABITS
Tip of the Month
June 2004
TIP--THE ROAD TO WEALTH STARTS WITH GOOD HABITS
Hereâs a quick run-though of the traits that separate the financially prudent from the perennially debt-ridden:
- Have a written financial plan. Donât only define your goals but outline what financial independence means to you. Calculate the income you will need to make it happen and look at the investment and savings options that you will use as part of your plan. Putting your ideas, game plan and timetable on paper forces you to be realistic and to develop a truly workable plan.
- Use credit cards sparingly. Get rid of all cards except for two at the most. The need for instant gratification is the destructive urge that keeps most Americans in debt for decades. Avoid using credit cards for goods that you cannot pay off in a couple of months. Credit card debt cripples your ability to invest and save... which leads us to our next step to financial independence.
- Explore the savings options offered by your employer or develop your own retirement funds. Build a special fund for "rainy day" expenses so you wonât have to raid long-term investments. Get in the habit of saving most - if not all - of any pay raises or bonuses you receive.
- Adopt a modest lifestyle. Live within your means. Do you have to buy a new luxury car with crippling monthly payments? Donât buy more house than you can comfortably afford. Buy quality, but avoid over-priced designer, apparel, shoes and cosmetics. Avoid the conspicuous consumption that is part of our culture.
- Invest in your future. Make your money work hard for you. Build a diverse stock portfolio; look at other investment options including mutual funds and foreign funds. Seek advice from a professional financial planning expert and your tax consultant. Develop a working relationship with advisors who will look out for your interests in changing economic times. You will still be in the driverâs seat but you will receive the benefit of professional expertise when it comes to diversifying a stock portfolio, minimizing risk and tackling complicated tax issues.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.
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