Good Financial Habits, Willingness to Change Behavior Are Key
The truth is, most of us have never been taught to become a millionaire. Another truth is that while the steps below cannot guarantee that you’ll become a millionaire, if regularly followed, they can improve your overall financial health and well being. And if you’ve forgotten, neglected or have just been unable to adequately prepare for your retirement or financial future, the steps below can help you to move in the right direction.
There are many changes anyone can make, no matter what their age or income to at least improve their financial life. In fact, “change” is often the key word for those who are serious about improving their finances and truly wish to accumulate real, long-term wealth. In fact, one of the first things many of us need to do is change our financial habits and attitudes.
Since most of us procrastinate when it comes to saving and are not taught how to plan or set goals, the first step is to write down on your calendar, one hour each week to focus and learn about financial matters such as, saving, investing, taxes, insurance and building net worth. For many, overcoming one’s fear of risk and to reverse generations of bad financial habits and misunderstandings may be one of the keys leading to financial success. In short – you must first mentally become a millionaire before you actually become one. The following simple steps can help:
Phase One – Your First Five Steps
1. Create an outline of your current financial life
2. Make a list of your long-term financial goals
3. Run your household like a business
4. Utilize compound interest
5. Permanently get out of debt.
Phase Two – Bonus Steps Anyone Can Take
1. Use qualified-retirement plans
2. Identify your risk tolerance level
3. Consider insurance to protect your health and wealth
4. Read books on wealth creation and investing
5. Work with an independent financial advisor.
Two basic goals are to reduce and eventually eliminate debt and make a plan to save/invest more. Be sure to live beneath your means – in other words, have more coming in than going out each month. A good way to start is by writing down your total income and then dividing it by the number of hours per week you work. Then add in expenses to form a “household balance sheet” that enables you to learn how much of your aforementioned income is coming in against how much is going out. After that it’s time to look ahead and decide how much you’d like to be worth five, ten and 20 years in the future. To reach your goals you may need to sacrifice, maybe postpone that new car purchase or vacation in exchange for greater financial peace of mind.
Accept that it often can take a few years to see significant financial results but forming good financial habits is generally more sensible than trying to get rich quickly. The secret to becoming wealthy is actually not a secret. Don’t be afraid to make changes in your financial life and then work to grow assets through saving and investing, watching your expenses and by working closely with an independent financial advisor.