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Four Habits For Financial Success

Four Habits For Financial Success

October 13, 2017

We’ve all heard the term “get rich quick.” In most cases, this is more of a dream than a reality. Shortcuts to accumulating wealth rarely pay off unless you are lucky enough to win the lottery. What will make the biggest impact on your financial life is the habits you create and maintain. Habits aren’t necessarily flashy. They require consistency, discipline, and hard work. Taking financial shortcuts may not get you where you want to be, but implementing some tried and true financial habits can get you one step closer to financial success.

1. Plan, Dream, Strategize

Don’t be afraid to dream big financially. What if you could save $100,000 in the next five years? Having a lofty goal in mind can provide you with the motivation to stay on track. But as most of us know, it’s easy to get discouraged when waiting to see progress. To avoid getting frustrated along the way, celebrate small milestones, such as reaching $5,000, $10,000, $25,000, and so on. Reevaluate your goals every year to ensure you’re on track and make adjustments as needed.

The same principle applies to just about any short or long-term goal, from saving for college to buying a house. In order to know what strategy to employ, you’ll need to know what you ultimately want to achieve. This is why setting goals is so important.

2. Live Below Your Means

If you want to build your wealth quickly, you need to spend significantly less than you earn. While this may seem like obvious advice, many Americans are talking the talk but not walking the walk. Only 55% of Americans are actually living within their means, according to a 2015 Pew Charitable Trust poll. (1) Living frugally means spending your money on needs, not wants. Take a detailed look at the money flowing in and out. What are you spending your money on and what expenses can you reduce or completely eliminate? Start cutting back on unnecessary costs and monitor your spending every week. Eventually, spending less can become second nature.

One of the best ways to monitor your cash flow and keep yourself accountable is to create a budget and stick to it. A budget helps you establish parameters for operating your household, understand if your goals are achievable in your desired timeframe, and even contribute to reducing stress in the event of an unexpected incident, such as the loss of a job or an injury.

3. Save Early and Often

One of the major benefits of saving early and frequently is the power of compound interest. If given the choice, most people would choose to spend less money on achieving their goals so that they have more money to pursue their passions in life. Compound interest helps the money you put away grow faster due to interest building upon itself. You can make your money work smarter rather than harder to pursue your goals.

If you procrastinate and delay saving, you not only lose out on your money working for you, but you also make it harder on yourself. You’ll also have less time on your side, so you will have to save more money and may have to increase your tolerance for risk in order to achieve your goals.

4. Seek the Guidance of a Professional

In fitness, having a workout partner can maximize your results. Having a partner holds you accountable and inspires you to push harder, even when the going gets tough. It’s easy to slack on adhering to your budget or slip up on following through on your goals when you don’t have someone holding you accountable. This is where a good financial professional comes into play.

An advisor not only helps you stay on track, but can also provide knowledgeable advice, tips, and answers to your greatest financial questions, including:

  • Should I start investing or pay down debt?
  • Will I have enough to retire when I want to?
  • How much risk should I take?
  • How much should I be contributing to my company’s 401(k) plan?
  • Do I need to be on a budget?

An advisor can help you determine how to establish a strategy based on your specific needs and circumstances. Find a financial advisor you trust to help you stay on track and provide advice when you need it.

Get Started Now

While it takes patience and time, you can work toward your goals by following a few valuable financial habits. My mission is to inspire confidence, help you plan ahead, and make educated decisions with your money. As a dedicated partner in your financial journey, I strive to make your financial independence my priority. If you are looking for a partner to help you implement habits that can improve your finances, feel free to call me today at 909-981-1720.

About Philip

Philip A. Board MSFS, CFS, is a retirement planning specialist and the founder of 1on1financial, an independent comprehensive investment firm serving individuals and businesses near Upland, California. Through educational workshops and a non-sales environment, 1on1financial specializes in working with employees of Southern California Edison, UPS, Esri and Verizon.