Making millions is all about starting early, driving slowly and reaching safely
Do you know what’s common between great husbands, caring fathers, compassionate bosses and efficient employees? Well, statistics say that they are usually very savvy at managing personal finances. Learn from what these successful guys tell you about simplifying life and maximizing money.
You don’t commence a dieting program unless you know your weight, do you? In much the same way, it’s important to know what you’re worth before you think of minting millions. Your net worth is the sum of all your assets minus your liabilities like loans. Figure it out and get set to roar down the highway of personal finance.
Most millionaires made their millions not by working their guts out. They worked smarter, not harder. They decide their financial goals and work out how much they need to save each month to get there. Ask your bank to automate a steady stream of monthly payments towards your investment account. That money works for you even as you sleep.
There’s a saying that the cash you don’t see doesn’t hurt you. As soon as your paycheck hits the account, earmark a fixed amount to head for your 401(k). The money maximizes your long-term investment. Remember that the employer gifts a matching contribution to what you deposit. Is there a safer way to double an investment without feeling the pinch?
If you steadily stash away 10 percent of your monthly income into a retirement plan, you are saving at least $300 in taxes for every $1,000 contribution. Treat it as a small sacrifice for a greater goal. Down the road, as your 401 (k) statements start heading home, you’ll be pleased as punch. If you start trending this in your 20s, you’re looking at a huge retirement fund.
Younger investors would be doing themselves and their bottom lines a great favor by investing in healthy stocks. If you are wary of individual stocks and their instability, turn to mutual funds. Your 401(k) portfolio managers and private companies will help you maximize returns from funds that protect you while you earn. Index funds present attractive options because they diversify into small, medium and blue-chip stocks with very little direct risk.
You’ll make steady progress if you consider property as an investment. Decide which serves you better – your own home or the rental. Calculate the rental rate that you can afford. Next, zero in on the price of the home you’d like to buy. Divide the rental low into the commercial rate of the new home. If the result falls below 15, buying the property would be the better option. If it’s more than 15, it’s safer to rent.
Juggling multiple credit cards is a bad idea that could trap you in debt. The better strategy would be to use one card and settle balances on a monthly basis. It’s the sensible way of handling money, and your credit rating will improve. Never accumulate credit card debt without having a backup plan to clear the balance.
Focus on building your emergency stash. Divert all your bonuses, cash gifts and windfalls there without hesitation. Ideally, at any moment of time, you should have six months expenses saved in your emergency fund. When you face a calamity, natural or man-made, such a fund empowers you and boosts your net worth and accumulated assets.