With Summer in full swing we are all focused on our physical physique, but how about your financial business? What about saving for a downpayment on a new house? Here are the top tips to keep your wealth in tip-top shape:
1. Live Below Your Means
This is the most important tip to abide by when organizing your finances.
If you find a strong enough why, it gives you the fuel to propel you to get there, wherever ‘there’ is.
You can start by focusing on one area, address it first before moving on to the next. The important thing is coming up with a plan that works for you.
Many property managers are sometimes overwhelmed by the financial aspects of managing a trust, on top of managing their general business finances (if they own one).
This would have to be one of the biggies. When you are young, it’s easy to push super to the back of your mind in the ‘think about it later’ basket. That’s fine but you don’t want to lose all track of any super accounts either. You need a strategy to achieve your financial goals. Hope, as they say, is not a strategy
Calculate what it costs to be you: this includes rent expenses, car, insurance, gas, and even trips to Whole Foods (see attached spreadsheet.) Spend less money per month than what you actually need. When calculating your expenses be diligent and include everything, but always overestimate and put the rest in savings!
2. Keep Credit Card Use at a Minimum
Do not use your Credit Card for everything! For your “fun money”(-i.e going out to eat, shopping) take out a a certain amount of cash each week. Actually handling the money makes spending it tangible–and when its gone, its gone!
If you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual “return on investment” would be a whopping twenty-five percent.
3. Start Early
The earlier you start, the better off you will be! It is never too early to start planning for the future so get a proper insurance quote to plan ahead. Quotes include planning for retirement, 401k, investing, and even drafting your will. The better your foundation for your wealth, the stronger your finances will be.
4. Keep a “Rainy Day” Fund
Everyone should keep a “Rainy Day Fund” for emergencies. According to Brown, 1/3 of Americans are one paycheck away from homelessness. Medical expenses are the number one cause of bankruptcy. If you are single, your goal should be to save at least 1 year of your living expenses in your “rainy day” account. If you are married, save at least 6 months.
5. Begin Decreasing Your “Bad Debit”