Determine your life goals is much more than just a list, but that list could be part of the package, too.
• Identify where the money goes. There is a choice you can make with your income spend it now or save it for later. Economists call it the investment decision. Put together a spending plan for your income, and stick to that plan. It is worth call it a spending plan rather than a budget because budgeting, like dieting, is a chore, while a spending plan has you choosing how to allocate your income. Always keep track of your spending. Whether it is with an application on your smartphone or on a scrap of paper you keep in your wallet, track your spending to see if your spending plan matches your spending reality.
• Always Spend less than you make. It is Easy to said than done. Make it a point to spend less than you earn. Commitment to living within your means is a first step toward working toward the future.
• Exploit your employer’s matching contributions. Learn and know your employers contributions to their employees’ retirement plans. Most of us aren’t saving enough for retirement. It is not too late to start building a retirement reserve.
• Form an emergency fund. Its better to always keep some money in reserve for financial emergencies. This is where for many people they start investing. In most cases an emergency fund is a pool of money invested in liquid investments, i.e. investments can be converted to cash without penalty or reducing value. Common rule of thumb is to have three to six months’ worth of living expenses available in your fund.
• Diversify your approved list. Look at how you’re invested and consider expanding the number of asset classes held in your portfolio. Go outside the normal division of stocks, bonds and cash, and explode a little deeper. If your portfolio is A country. centric, consider adding an international component. Distribute that international component between developed and emerging market economies and look at both bonds and stocks. Obtain professional help as needed including professionally managed mutual funds.
• Evaluate your banking relationships. Watch your banking relationships from the deposit and the credit side. E.g What’s the fee structure for out-of-network ATMs? Do you have to pay to talk to a teller? What kind of interest are you paying on your credit card? Is there an annual fee? If you’re earning miles or points on your account activity, is that affinity program are you redeeming the points before it gets expire. Shifting your banking relationships isn’t something easy. It’s a headache to switch the direct deposit of your paycheck, direct debits on your loans, and to migrate your online banking and bill paying. Look around at what’s out there and see if the grass is greener at another financial institution.
• Simplify. Focus on the things that are important to you. Get rid of the things that don’t make a difference to you. Many of us are juggling multiple responsibilities. Between work, family, friends and studies, there just aren’t enough hours in a day. You just have to figure out how to best use the 24 hours you have. A seminar on time management can help. So can turning off the TV. Seek a balance between.