Being financially secure enough to enjoy your
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 may have.
Where many people get into trouble is that they
feel entitled to a standard of living that
exceeds
what they can afford. However, if you keep
your
standard of living below what you earn, you
won't have to cut back to accumulate money;
instead, you will naturally have excess cash flow
because you earn more than you need to live
on. 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 years to recover.
Examples of calculated risks might include
moving to a new city with more job
opportunities, going back to school for
additional
training or taking a new job at a different
company for less pay but more upside
potential.
Starting a new company, working for a small
startup company, or investing in high risk/high
return stocks, is easier to do when you're
young. Younger people can afford to take risk,
and the same opportunities might not be
available later in life. As people get older and
assume more family responsibilities like paying
off the mortgage or saving for the kids'
education, many are forced to play it safe and
are unable to capitalize on riskier opportunities
that present themselves.
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 increases the cost of the
lifestyle.
Borrowing money should be used only for
investing - where your gain will outrun your
borrowing costs. This might mean investing in
the literal sense (for stocks, bonds, etc.) or it
might mean investing in yourself for your
education, extra training, to start a business or
to buy a house. 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.
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