It is a well published fact that most Americans have very little or no savings.
This, in my opinion, is a direct result of most people wanting to live well above their means.
The problem is, over the long term this type of thinking leads to a reduction in your quality of life.
High credit card debt and living in a bigger house than you need is a sure way to continue living paycheck to paycheck.
This leaves little money left over to build financial independence.
Stop Spending and Get Out of Debt If you have to charge anything on your credit card, and you are not able to pay off the entire balance at the end of the month, then you are spending too much money.
Stop using those credit cards and start paying down your debt.
The first thing you have to do is cut down on spending.
Sit down and write out all of your bills and necessary living expenses.
Whatever is left over you should use to pay off your credit card debt.
Start Saving and Investing Once you are out of debt, then you can begin putting money in the various investment vehicles that have proven to appreciate in value over the long term.
Where should you invest your money? There are many choices out there.
The best thing to do is talk to a licensed financial adviser if you are not educated on the various types of investments.
I think it is an absolute necessity to contribute the maximum amount to an IRA each year.
An IRA is a tax-deferred investment which is an enormous advantage for long term capital growth.
I think it is also important to have at least three month's living expenses saved in a high yield savings account.
Once you have enough in your savings account, and you have contributed the maximum amount to your IRA, you can then begin to put money in various investment vehicles that suit your return expectations and risk tolerance.
Develop a Disciplined Savings Approach Think of your savings plan as a bill that you have to pay.
If you have $500 left over to save, then make it a point to write a check for that amount at the end of the month to one of your investment accounts.
Don't miss a month.
Once you do this for awhile it gets kind of fun to watch your savings grow.
You begin to feel better about your financial situation.
Every month that you write that check, you take a positive step towards becoming financially independent.
Don't Spend It You must resist the urge to spend the money once you have a decent amount saved.
Don't spend your money on things you don't need.
Put that money to work for you so one day you can afford whatever you want!
This, in my opinion, is a direct result of most people wanting to live well above their means.
The problem is, over the long term this type of thinking leads to a reduction in your quality of life.
High credit card debt and living in a bigger house than you need is a sure way to continue living paycheck to paycheck.
This leaves little money left over to build financial independence.
Stop Spending and Get Out of Debt If you have to charge anything on your credit card, and you are not able to pay off the entire balance at the end of the month, then you are spending too much money.
Stop using those credit cards and start paying down your debt.
The first thing you have to do is cut down on spending.
Sit down and write out all of your bills and necessary living expenses.
Whatever is left over you should use to pay off your credit card debt.
Start Saving and Investing Once you are out of debt, then you can begin putting money in the various investment vehicles that have proven to appreciate in value over the long term.
Where should you invest your money? There are many choices out there.
The best thing to do is talk to a licensed financial adviser if you are not educated on the various types of investments.
I think it is an absolute necessity to contribute the maximum amount to an IRA each year.
An IRA is a tax-deferred investment which is an enormous advantage for long term capital growth.
I think it is also important to have at least three month's living expenses saved in a high yield savings account.
Once you have enough in your savings account, and you have contributed the maximum amount to your IRA, you can then begin to put money in various investment vehicles that suit your return expectations and risk tolerance.
Develop a Disciplined Savings Approach Think of your savings plan as a bill that you have to pay.
If you have $500 left over to save, then make it a point to write a check for that amount at the end of the month to one of your investment accounts.
Don't miss a month.
Once you do this for awhile it gets kind of fun to watch your savings grow.
You begin to feel better about your financial situation.
Every month that you write that check, you take a positive step towards becoming financially independent.
Don't Spend It You must resist the urge to spend the money once you have a decent amount saved.
Don't spend your money on things you don't need.
Put that money to work for you so one day you can afford whatever you want!