Achieving financial success one step at a time
The old adage, “A penny saved is a penny earned” is still true today. Achieving a lifetime of financial goals is possible with good financial planning. It begins with a penny, and that penny is important.
Consider the following steps.
Begin to set financial goals for yourself and your family early.
Even little children can learn to achieve their own short and long-term financial goals. For example, a four year old can begin to save pennies in a piggy bank, from his or her allocated allowance and use it for something that he or she needs or wants. If he or she does not spend it, or all of it, the amount saved will grow. After a while, it will overflow his or her piggy bank. At that time, parents can open a savings account for the child. In the bank, the money will continually generate interest. The child, shown how the money is growing, will learn to take pride in his or her savings account.
Develop a budget focused on needs rather than wants.
A child can learn to budget simply by being taught how to differentiate between needs and wants. For example, every child needs to have lunch at school and may want extra snack food, too. Carrying or purchasing a lunch that meets his or her needs first, allows the child an opportunity to decide whether to spend or save his or her allowance, as well as any extra money he or she has earned on what he or she wants. It is usually a good idea to put extra money a child has saved into his or her savings account, as interest will accumulate. A child can understand what a bank statement means and watch his or her savings grow.
Encourage good spending habits in teenagers.
Teenagers develop good spending habits when taught how to spend their allowance money or other money that they earn, on only what is worthwhile. For example, a teenager will learn to purchase a good jacket rather than spend all of his or her money on hamburgers and pop. He or she can learn how to shop for quality items that are on sale, like running shoes and boots. He or she can work to earn extra dollars for special purchases, including electronics or sports equipment.
Practice saving money for emergencies and for the future.
Young adults can allocate part of their money for emergencies and practice saving money for the future. There is an easy way to do it, called ‘pay your-self first’. Before any of his or her income is spent, he or she can deposit some money for emergencies and savings into a special bank account. He or she will also learn to save money for a new car or home, as well as a wedding and a honeymoon.
Start an educational fund for your children.
Young parents can establish a savings account for their children’s education. By the time the children are ready to go to college or university, there will be a sizable savings with accumulated interest.
Invest your money wisely.
Investing money carefully, on a regular basis will help to secure a lifetime of financial goals. Inquire into retirement savings programs, stocks and bonds, making certain that the investment you choose will be secure. At times, the best investment can be property.
Avoid the use of credit cards.
Avoiding the use of credit cards prevents overspending, as well as the necessity of repayment with high interest rates. Parents may give their teenagers credit cards, not knowing where they will use them, or how much money they will spend with them. Everyone needs to learn how to use credit cards wisely. Insist on receipts for purchases, keep accurate records and develop responsible repayment practices. Set a good example with your own use of credit cards.
Keep accurate records of your income, investments, savings and spending.
Know how much income you have coming in and how much is going out as fixed income, as well as variables. Do not overspend. In other words, do not waste money that you do not have or cannot afford to spend. Maintaining accurate records on a regular basis will help you reach your lifetime financial goal and achieve financial success.
Note that because of the ongoing global economic status, it is always wise to plan for major purchases. As you plan ahead be aware of the value of a dollar. Sometimes it is not how much you have, but how much you save, rather than spend that determines your success in achieving a lifetime of financial goals.