Personal Finance Goals

We all make mistakes, but there are some fundamental ones that will cause long term damage. We commit those mistakes for any number of reasons including fear, ignorance, ego or a desire for immediate gratification. This disinclination to give up a certain immediate benefit for an uncertain substantially greater future benefit is well recognized by psychologists.

And there is the danger; the fact that we invariably make decisions based on our emotions. Don’t despair if you’ve committed these mistakes, we all have. Just try and adjust your thinking to adopt these as a philosophy that you seek to follow at every opportunity.

1. HAVE A GOAL AND A STRATEGY FOR ACHIEVING IT

If you don’t win it, inherit it or marry it, wealth will not happen. You need to know what you want to achieve and how you will get there. If you don’t have a road map to your pot of gold you are likely to get lost; no goal, means no strategy, no focus, no savings and no financial security. The person responsible for your financial future is in your mirror. You can choose to control your financial circumstances or let your lack of financial circumstances control you. Certainly, addressing questions about retirement when your retirement is on the horizon has no chance of working.

2. A CHANGE OF FORTUNE REQUIRES A CHANGE IN BEHAVIOUR

Step 1 is to admit that you are living beyond your means.

Do a short-term exercise; keep track of your expenditures for a couple of months – you will find it a sobering exercise. While the money wasted on coffee, cigarettes and other non essential might not seem like much, the real loss is how much it could grow to if committed to a saving program. Very few people save cash from their salary, no matter what their level of income; they grow into their pay cheques.

3. CLEAR THE CREDIT CARD SLATE EACH MONTH

Credit cards are a necessary evil. They can be a great convenience and relatively inexpensive if you are smart enough to navigate around the little “traps” designed to cost you money. If you are not they can seriously jeopardize your finances. Minimum payments are meant to extend the term of your financial arrangement. Pay the minimum and it will take you forever to pay off your bill. For example, a $3,000 debt, at 18 percent interest, will take more than 22 years to repay at the minimum level.

4. HAVE AN EMERGENCY FUND

Could you last 3 months without an income? You need an emergency fund for unexpected expenses and to remove the need to access high-interest credit card debt. Call it your “good sleep” fund, because having some money in the bank to cover unplanned expenses will certainly help you sleep better at night.

5. CREATE A LONG TERM PLAN TODAY

The problem with wanting to get started with a plan, and not doing so, is that with every passing day your problem is growing and growing. Why? Because the time left to provide for your 20 years in retirement, without an income, is getting shorter and shorter. Time is your friend if you start early but your enemy if you start late.

6. TAKE OUT LIFE ASSURANCE

Life assurance is designed to protect you, and your family, from the risk of unexpected death. It is called “assurance”, not “insurance”, because death is 100 per cent assured. Who will provide for your family; you today, or your family when you are gone? If your partner is a full-time “director of domestic duties”, don’t disregard the value of what they are providing when you calculate how much life insurance you need; and don’t overlook the cost of child-care.

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