PAY YOURSELF FIRST:   Deposit a set amount each and every month into an investment program, no matter what other financial obligations you have. Paying yourself first is good common sense. Before anyone else gets a claim to your money, pay yourself by putting a set amount aside in a savings or investment account.

 

1) Emergency Fund: This account is for unforeseen emergencies like the loss of a job or a household repair. A good rule of thumb is to set a goal of having three months’ salary in your emergency fund.

2) Short-Term Savings: Save up for things like vacation and other big ticket purchases. It’s better to pay cash than to get locked into high interest credit card debt.

3) Long-Term Savings/Investment: This includes retirement, college savings and other long-term goals.

 

This equals your percentage of income saved!

 

ADJUST YOUR PRIORITIES: Time can be your best friend or your worst enemy. In addition to using a budget and knowing where your money goes every month, it’s essential to know how money works together with time. Make time your friend by starting to save now. With the power of compound interest at work for you, you’ll be amazed at how quickly a few hundred dollars become a few thousand.

 

TIME IS MONEY: If your goal is to save $500,000 for retirement at age 65, look at the difference time makes. The sooner you begin to save, the greater the growth on your investment.

 

AVOID THE CREDIT TRAP: Of all the threats to your financial security, none is more dangerous than debt.   Do you know the difference between revolving debt and fixed debt? Revolving debt is a way to get caught in an interest trap that can add up to big bucks along the way. If you’re nearing a crisis point and your debt payments are consuming your disposable income, consider a debt consolidation loan. 

What is a debt consolidation loan? With a debt consolidation loan, the lender pays off your creditors and combines all the balance amounts into one loan with one fixed payment. Once you’ve consolidated, you’ll begin to make lower monthly payments. You can then apply the extra money you’ve made available toward your debt freedom and your retirement savings.

Develop good habits, but remember, once you consolidate your debt, it’s critical that you close your credit accounts. It’s important to develop the discipline of paying cash only, otherwise you might end up where you started.

 

There are two major areas in which families may not be getting their money’s worth that are great areas to target for adjustment: low-interest savings and high-cost life insurance

Where do I begin? Mutual funds are one of the best options available today. They offer an opportunity to participate in the stock market without having to select and manage individual investments. The extra edge is “dollar- cost averaging”. The stock market is another area in which systematic investing can pay off.   Dollar-cost averaging means investing a certain amount each month, regardless of what’s happening in the stock market. By doing that, the price you pay-your “dollar”-averages our over time.

 

Life Insurance: Buy the right kind. Life insurance policies may be one of the most important financial instruments many of us will ever own, and buying the right kind of insurance is one of the best ways to protect your family’s future.

Term insurance offers pure death protection. Life insurance is not a permanent need that every family has. Many financial experts see it as a way to simply “buy time” until you accumulate savings, not as a permanent fixture in your financial program. This is called The Theory of Decreasing Responsibility.

 

 

Get out of Debt ASAP: Try to pay down credit cards and high interest debt as soon as possible

 

Leave Retirement Alone: Raiding your 401(k) or IRA is one of the worst financial moves you can make. You’ll get hit with stiff penalty fees, not to mention your loss in future earnings.

 

Stash Cash: Try to build a cash cushion of three to six months, in case of emergencies. That can keep you from having to charge unexpected expenses.

 

Don’t Rely On Credit: Charging essentials like groceries or gas is a serious financial red flag indicating your lifestyle is out of balance with your income. Take steps to downgrade your lifestyle (downgrade your care or house) or increase your income (get a roommate or start your own business) and get your finances in balance.

 

Watch Your Statements: Many lenders are raising rates, hiking fees and lowering credit limits. You might also consider consolidating your debt to get a better handle on payments.

 

Keep Saving: Don’t let emotions keep you from contributing to your retirement accounts. You can put $5,000 intoanIRA in 2008 or $6,000 if you’re 50 or older.