When it comes to finances, this is not just a career or personal issue. Our financial health and well being helps us live our lives with less stress and makes it possible for us to take advantage of all that life has to offer. But some people struggle with their finances not just because they do not make enough money but because they are not using the money they have responsibly.
So let's change that.
Let's change out attitude towards money and our finances right now. Let's agree on one important thing. That is that debt and interest are bad for you and that you should do your best to avoid them or minimize them at all costs. Debt has destroyed more lives because once you find yourself in debt it becomes very hard for you to dig yourself out of that hole.
Something else you need to understand is that there is only one person that is responsible for your financial health and that is you. Even if you have a financial advisor it is still your responsibility to keep your finances healthy, not your financial advisor. They can make suggestions but you make the final call. It can be no other way. Even when your advisor has your authority to move investments around you need to keep on top of things to make sure your financial future is being protected.
Out financial health has three important segments. That is how you are using money today, how you intend on using it in your immediate future and what you are going to do about saving for your retirement. If you take care of all three your financial life should run smoothly at least most of the time. But if you forget about any one or more of these segments you will find yourself in trouble.
The way you use your money today will play a significant role in how you are going to use your money later. Debt you incur today is going to make your future that much more difficult. Paying interest is like giving money to someone and getting nothing in return. Paying interest on a mortgage is one thing and for most of us that is unavoidable. But paying 18% credit card interest on that new stereo is just not responsible. Be responsible and living within your means today will enable you to have more and do more in the future.
Setting up a financial plan so that you know what your goals are for the next 5,10 and 20 years is important. You might have college education for your kids to pay for or other expenses and you need to understand how you can achieve all you want to achieve without going into debt or having to work 14 jobs to make ends meet. Being pro-active and saving today for what you will need in the future is the best way of avoiding crushing debt when those expenses roll around!
We all hope to one day retire. But the honest fact is that we cannot retire until we have saved enough money to carry us through those years when there is no paycheck coming through. I hate to break it to you but Social Security is not going to come even close to paying all your expenses. You are going to have to have a retirement plan so that the money will be there when you are ready to retire.
That means saving TODAY, even if you are only 25, so that compound interest over the years will increase your retirement nest egg. It means doing without so that you can contribute and build your retirement nest egg. A Hawaii vacation might be nice but only if you have the money after you set aside for your retirement. Like the rest of your finances, YOU are the one who is responsible for your retirement. No one else. Just you!
One last bit of advice. Get rid of the entitlement feelings when it comes to money. The fact is you are entitled to the things you can afford and nothing else. If your doctor neighbor has a Ferrari that doesn't not mean you should have one as well. If your rich brother-in-law has a 15 room house with 6 bathrooms that doesn't mean you can sell your 3 bedroom bungalow and buy a house like his.
You buy what you can afford and you live within your budget. If you cannot pay cash for something you don't buy it. You wait until you have the cash. You don't pay a single month of credit card interest. You do not hide behind a bankruptcy and you do not lie, cheat and steal to make extra money.
Debt and money troubles have caused a lot of people to do a lot of stupid things. Things that can and will follow you for the rest of your lives. So do the smart thing and be responsible with your money. Use it and spend it wisely. Create a lifestyle and attitude that respects money and it's role in your life. do not become a slave to money. Your money should be working for you not you working for your money!
Think about that for a minute.