These are my financial commandments that I’ve implemented in my own life over the past 6 years. They’ve helped me earn more money, eliminate my debt, and set my financial compass to a destination.
With this post, I’m not attempting to use some sort of scare tactic to convince you to pull your head out of the sand. But I would like you to ask yourself this question: What are you doing to get your financial life in order?
Earn What You’re Worth But Spend Less Than You Make
Look at that . . . I’m starting you off with a two-for-one deal. One of the best ways to get your compass pointed in the proper direction is to make sure that you’re earning potential is maxed out.
This will depend very much on your personality, your self esteem, your education, and your view of your personal self worth. But there’s no sense in whining about not making enough money. If you think you should be making more, then get out there, be creative, and find ways to boost your income.
The pitfall that you want to avoid is to NOT ramp up your spending when your income increases. Heck, even if your income stays the same, it’s imperative that you spend less than what you bring in. The flip side of this coin will land you in debt 100% of the time.
Create a Budget and Stick To It
Having a budget is an absolute must on anyone’s financial planning list of essentials. Spending without a budget is like trying to fly the Command Module back to Earth without a computer guidance system.
It’s hit and miss, and most likely it will be miss – a big miss.
Sure, there are probably plenty of people out there who spend wisely without the use of a budget. But most of us aren’t that disciplined.
Creating a budget for your finances gives you a road map that details where all of your money is going. The more detailed the map, the better chances of you finding your way.
But a budget does no good if you don’t implement, follow, and persevere. Budgets aren’t magical. The won’t instantly cure all of your fiscal ailments. But putting them in place and abiding by their guidelines will help take you where you want to be.
Pay Off Credit Card Debt, Car Debt, and House Debt
In my personal opinion, no one can state it better than Dave Ramsey and the Debt Snowball System. But whatever plan you decide to choose, make sure you take care of your debt.
Spending less than what you earn will ensure that you stop incurring more debt. But you still must reduce the debt that you’ve already racked up.
It’s not going to be very easy, but don’t skip the step of paying off your debt.
Set Up Your Savings
Whether it’s a savings account, an emergency fund, a rainy day fund, or an online account, make sure you have a savings account that will allow you to keep out of debt when emergencies or any other unforeseen events come up.
Nothing feels worse than paying off $4000 in credit card debt and having to put a couple grand right back on the card for a car repair. Supplement life’s uncertainty with a beefed-up savings account.
Retirement Plans Are For Winners
Don’t overlook saving for retirement. Remember, there’s no amount too little to save. Everything helps.
Setting up an IRA or making the maximum contributions to your 401k are essential to keeping your future financial status secure.
Sure it’s 20 or 30 or 40 years away, but there’s no time like the present to help your ‘future self’ with a little retirement savings account.
Keep Excellent Records
Nothing feels better than the benefits of having necessary records when they are needed most. But if you don’t keep good records now, you won’t magically have them in the future. Sorry, but there is no record fairy.
Photo By Walt Stoneburner