7 Tips to Safeguard Yourself From Financial Challenges
(1) Save at every opportunity
Life provides all of us with opportunities to save. However, life also provides opportunities that we find difficult – if not impossible – to let pass by. Fear of missing out is a big problem these days and many people will purchase or spend money even in the face of a great opportunity to save. By delaying this opportunity, you will also delay your ability to retire early and will likely be required to take unnecessary risks with your investments.
Failure to save is a problem that plagues many young people, who very often only see the short term since they feel they have time. Take advantage of that time by saving early and often. Soon, you will find yourself sitting on a bankroll of cash that you can (and should) invest in your future.
(2) Think Long & Hard about major investments
Typically, the purchase of a home, vehicle, or boat is large investments that require either a loan to be taken out or a large amount of capital to be utilized at the time of purchase. Avoiding impulse buying in this regard is vital to financial success and sustainability. Considering the actual value of the asset before you buy it by comparing it to comparable assets is crucial.
Consider whether the asset will appreciate or depreciate in value also consider some of the carrying costs of the asset before you make the purchase. In other words, a car or boat may seem to not carry with it many expenses but the cost of fuel and insurance sometimes exceeds the actual monthly payment you will make. Make sure to obtain a car insurance quote before purchasing a vehicle.
It may save you in the long run. The same goes for a house – homeowners’ insurance and property taxes can become very expensive (not to mention maintenance which can be very costly). Taking these factors into consideration before making a major purchase will help you to swim and not sink financially.
(3) Resist The Urge to spend more as you earn more
One of the biggest pitfalls we fall into is the impulse to spend more money as we earn more money. The secret to success is not necessarily earning more money but is not spending more money as our salary increases. Buying a second home or a second car may not be totally necessary just because you received a pay raise. Slowly saving money by siphoning it into an investment account as your salary increases will afford you the long-term success you are seeking.
(4) Establish Worthwhile Priorities
Saving is a noble undertaking but it must be put into practice properly. Far too often, people will save for a noble and worthwhile goal and appear to have their priorities straight but will neglect a more necessary goal that should have taken priority. For example – saving for your children’s education at the expense of your own retirement. There are a number of options children can pursue in order to obtain higher education such as low interest and deferred-interest student loans.
However, you are the only one that’s going to save for your retirement. Saving equally or in some reasonable proportion is recommended so that you will have money to retire on and your children will have tuition. It does not have to be an “all or nothing” proposition.
(5) Failing to Plan
A long term vision is imperative to sustain financial success. Saving for a rainy day may sound like a tired expression, but there is merit in squirreling away funds here and there as an emergency fund, at a minimum. You will be surprised at how quickly that fund grows and can be used as investment money down the road.
Skipping nights at the bar and instead stashing that money week by week will result in a nest egg you will be proud of down the road.
(6) Shortsighted, Panicked
In some instances, investments can go south and cause panic and rash decisions. Staying the course is often the best advice – instead of pulling the plug on an investment that doesn’t seem to be working out (and thus bailing out and losing what you have invested) sometimes it is more prudent to let things sit and settle before calling it quits.
Have a long-term vision with investments and, more often than not, you will see that things stabilize, markets rebound, and what looks like a loss can, in fact, turn into a profit if you allow it enough time to mature.
(7) Going It Alone
Taking advantage of the advice of experienced professionals is something to consider. The expression is “you can’t see the picture when you’re in the frame” and this holds true with personal finances. Relying upon a financial advisor who deals with issues such as yours on a daily basis could end up navigating you to financial freedom.
It is difficult to go it alone when it comes to finances and the experience that a seasoned professional brings to the table can prove invaluable to your financial success.
Follow these basic guidelines at the outset of your financial journey. By no means is this a one size fits all paradigm, but by taking these pointers into consideration early and often, you will set yourself up for financial success long term and will enjoy a life of ease as you make strides both personally and professionally.