life in retirement is the last thing on the minds
of those under 30. After all, with the stress of
all the expensive "firsts" that often come about
during this period, like purchasing a car, buying
a house and starting a family, it's hard to even
think about saving for the future. However,
working toward financial security need not be an
exercise in self-deprivation, as many people
assume. Attaining this goal even has some
immediate benefits, as financial insecurity can
become a serious source of stress - something
"20-somethings" have enough of already.
So can you achieve long-term financial security
without sacrificing your short-term goals?
Read on for 10 tips on how to do just that.
1. Have Fun
Enjoy yourself while you are young - you will
have plenty of time to be miserable when you
are older. Living a successful, enjoyable and
happy life is about achieving a proper balance
between time with family and friends and
between work and leisure time. Striking a proper
balance between your life today and your future
is also important. Financially, we can't live as if
today was our last day. We have to decide
between what we spend today versus what we
spend in the future. Finding the correct balance
is an important first step toward achieving
financial security.
2. Recognize Your Most Important Financial
Asset:
Yourself, Your skills, knowledge and experience are the
biggest asset you have. The value of your future
earnings will dwarf any savings or investments
you might have for most of your career. Your
job and future career is the most important
factor in achieving financial independence and
security. For those just entering the work force,
future career opportunities are as bright as
they've ever been. The large number of retiring
baby boomers is expected to create labor
shortages. There will be room for advancement
as companies scramble to fill the positions held
by these aging baby boomers. Those who are in
a position to take advantage of these
opportunities will benefit the most.
Look at yourself as a financial asset. Investing in
yourself will pay off in the future. Increase your
value through hard work, continual upgrading of
skills and knowledge, and making smart career
choices. Efforts to improve your career can have
a far bigger impact on your financial security
than tightening your belt and trying to save
more.
3. Become a Planner, Not a Saver
Research has shown that those who plan for the
future end up with more wealth than those who
do not. Successful people are goal oriented: they
set goals and develop a plan to achieve them.
For example, if you set a goal to pay off your
student loans in two years, you'll have a better
chance of achieving this goal than you would if
you merely said you wanted to pay off your
student loans, but failed to set a timetable.
Become a planner. Set goals and develop an
action plan to reach them. Even the process of
writing down some goals will help you to achieve
them. Being goal oriented and following a plan
means taking control of your life. It is an
important step toward improving your financial
independence and security.
4. Set Short-Term Goals - Long-Term Goals
Will Take Care of Themselves
Life holds many uncertainties - and a lot can
change between now and 30 years into the
future. As such, the prospect of planning far
into the future is a daunting task and in many
ways, it's often an exercise in futility for young
investors.
Rather than setting long-term goals, set a series
of small short-term goals. These goals could be
a simple as trying to pay off credit card debt or
student loans in a matter of months. Maybe
your goal is to contribute to your company's
pension plan with a set salary reduction
contribution each month. Setting short-term
goals that will help you to advance in your
career is important in helping you get ahead.
Remember, these short-term goals should be
measurable and precise. You can't win a race if
there's no finish line.
As you achieve your short-term goals, set other
short-term goals. Maybe you want
to acquire a higher degree (masters or doctorate ) ,house,earn a promotion at work or start up a new business from which you can buy your dream car. The constant setting and achieving of short-
term goals will ensure that you reach your
longer-term goals. If your goal is to be worth a
million by age 40, you cannot achieve
this without first achieving smaller goals like having what people call "peanuts". Remember Rome wasn't built in day
.
5. Planning For Retirement:
Forget about it?
Just out of school, retirement planning is the last
thing on your mind. So, if you have to for now,
just "fuggetaboutit". If you follow the other tips,
you will not only be more financially secure and
prepared in the short term, but you will also be
financially prepared for the distant future as
well.
However, if you take a few steps now to start
saving, like setting up automatic monthly
contributions to a retirement plan the better, or if probably you're still in school you can make this an agenda or prioty when you have started working .
If you implement this pay yourself first ideal,
you won't have to worry about how much
you're contributing; the most important thing is
to develop the habit of saving. The rest will take
care of itself. You can increase your
contributions when your income rises or when
you've achieved more of your short-term
financial goals.
6. Make Sure Your Lifestyle Costs Lag Your Income Growth
Many new graduates find that in the first couple
years of working they have excess cash flow. Still
used to their more frugal student spending
habits, it is easy to make more money than they
need. Rather than using excess income to buy
new toys and live a more luxurious lifestyle, this
excess could be put toward reducing debt or
adding to savings. As you advance in your
career and attain greater responsibility, your
salary should increase. If the cost of your
lifestyle lags your income growth, you will always
have excess cash flow that can be put toward
paying down debt, making investments, saving
for a home, or achieving any other financial
goals you .For all you know, you may
make more than the Joneses, who may be
funding their lavish lifestyle with debt anyway.
The good life should be a reward for your hard
work, good fortune and successful planning, not
something that you are entitled to. Once you
have established a certain lifestyle, it is
psychologically difficult to lower it. It is very easy to raise it.
7. Become Financially Literate
Making money is one thing; saving it and making
it grow is another. Financial management and
investing are lifelong endeavors. Making sound
financial and investment decisions is important
for achieving your financial goals. The more
knowledgeable and experienced you are in
financial matters, the fewer mistakes you will
make.
Research has shown that people who are
financially literate end up with more wealth than
those who are not. There is a strong monetary
incentive for becoming financially sophisticated.
Taking the time and effort to become
knowledgeable in the areas of personal finance
and investing will pay off throughout your life.
8. Seize the Opportunities:Take Calculated Risks.
Taking calculated risks when you are young can
be a prudent decision in the long run. You might
make mistakes along the way, but remember,
mistakes are the lessons of wisdom. You often
learn more from your mistakes than from your
successes. Also, when you are young, you can
recover faster from financial mistakes, and you
have many times to heal off.Taking calculated risks when you can afford to
do so is necessary to get ahead financially.
Playing it safe might be the bigger mistake in the
long run.
9. Borrow Money For Investments - Never to Finance a Lifestyle
As mentioned before with the Joneses, you
should never borrow to finance a lifestyle you
cannot afford. Using credit for a life you feel
entitled to is a losing proposition when it comes
to building wealth. The constant borrowing will
assure that there is no money available for
investing, and the added interest expense of
borrowing further increase your risk but in these cases, borrowing can provide the leverage you need to a reach your
financial goals faster. Borrowing to meet short-
term desires is wasteful .
10. Take Advantage of Financial Freebies
Not many things in life are free invest only you time to study financial times ,journals of the economy.Be very much ready to receive advice about been financially free such as this, it shows you're wise it doesn't cost any penny as such but your time and patience which will pay off greatly in the end.
Achieving financial independence is a goal most
people strive for. It is not necessarily easy, but
it is achievable if you understand your priorities,
set achievable goals and take the proper steps
toward reaching them.
GOOD LUCK ...SEE YOU THERE!
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