Of course, there is no yellow brick road, nor a pot of gold at the end of the rainbow. However, if you establish and maintain good financial habits, you greatly increase your chances of a solid financial future.
The “Stay Debt Free” section helps you focus on improving your financial position. After creating a budget and paying down your debt in a smart and efficient way, it is an easy transition to focus on building your wealth. Staying debt free is just another step along the road to financial freedom.
Start by getting a clear picture of your financial situation by looking at your cash flow and net worth. Is your cash flow negative? Do you need to cut down on expenses? Are you putting enough money into savings and retirement accounts? Are monthly debt payments a burden? A clear financial goal is to create a positive cash flow (more income than expenses) and funnel the money into your retirement and investment accounts.
Once you understand where you stand, you can thoughtfully establish some short and long term goals. You can work to find the right mix of cranking up your savings, building a retirement account or funding an investment account. Remember that risk and return go hand in hand, so keep your asset portfolio diversified. Finally, remember to protect yourself with the proper insurance coverage, including life, health, property, and auto insurance.
Finding the right balance between risk and reward is a combination of personality type, how old you are, whether you are single or responsible for a family, and experience.
If you paid off debt in your financial journey, it was probably stressful, but you gained a valuable learning experience. If you use the same discipline it took to stick to your plan to pay off your debt to different strategies to build wealth, you boost your chances of success.
Avoiding high interest and financial charges is a great way to save money; however, in order to build wealth, you need to invest. The sooner you start investing wisely, the longer your money has to grow and the larger the return.
Investing and building wealth require different skills and knowledge. Maintain a level of caution in order to protect yourself. Avoid any get rich quick schemes.
Find trustworthy professional advisors for your investment, tax, or legal needs. Get recommendations from people you trust and check out the background and experience of anyone in whose hands you are putting your hard-earned money.