Everyone wants a secret tip or a get-rich-quick scheme that will slingshot them to millionaire status. Unfortunately, that is very rare and not how things usually work at all. It takes time and the right behaviors to get where you want to be.
Building long-term financial success is primarily about understanding how to balance your income and expenses. Then you need to save a little bit for security and invest the rest wisely. That’s honestly about all there is to it.
It may sound boring. But for most successful people, it comes down to about 10% knowledge and 90% discipline and consistency. Really, even if you just abide by the following four simple tips, you really can find stability and set your family up for long-term financial success.
1. Set a Budget
It’s possible that you could achieve your goals without a plan. But that is basically relying on luck. You need a roadmap, and when it comes to your finances, it’s all about setting a budget.
While it may sound tedious, it really isn’t that complicated, especially if your paychecks are relatively consistent month to month without booms and busts. There are now so many apps and online tools that you really just need to input your income and big monthly expenses and most of the math can be done for you.
Obviously, the big-ticket items and consistent expenses (mortgages, car payments, tuition, groceries, utilities, recurring bills, etc.) are the core factors. But don’t forget to budget for things like entertainment, restaurants, travel, and clothes. The more granular you can get, the better it will work. And when you make sure to budget for fun stuff too, the whole process will be empowering rather than feeling like homework.
2. Live Within Your Means
Debt is the enemy of success. Some types of debt are unavoidable. Most people are never going to buy a home in cash, for example, and you may need to finance a vehicle at times. The key is to not go overboard, and to always live within your means. Don’t overextend yourself — particularly on these major expenses.
But the same goes for day to day purchases and little luxuries like buying lunch every day at work. Do you really have the income to validate spending that extra $15? Or are you just being lazy and trying to live a lifestyle that isn’t suited to your income? Lunch is probably lower on the potential list of problem, but the philosophy is the same for your travel plans, wine habits, or special classes for you kids.
Nobody is saying you need to live like a pauper. But you’re income is what it is. You can’t hide from the math. If you go beyond your means for too long, you will go into debt. And that can be a slippery slope toward insecurity and long-term disaster.
3. Save and Invest Smartly
Part of setting your budget and living within your means is having a little left over each month. Some of this should go into a savings account. Build an emergency fund that you can survive off of for six months. And maybe save up for bigger purchases you know are coming like your next car or down payment on a house.
Then, start investing a little bit. The key here is how, because you can get into trouble. Don’t start buying equity in local restaurants, chasing cryptocurrency fantasies, or trying to pick stocks. Those may be more sexy, but the best option remains putting as much as possible into a long-term, stable growth retirement account like a 401k or IRA.
This will give you the peace of mind for later, and then you can invest into other lower-risk funds — or 529 plans for tuition — that will help your money grow, slowly but surely. Be careful and don’t start playing around in unfamiliar territory. Try to think stable and realistic rather than volatile and get-rich-quick.
4. Take Advantage of Opportunities
Getting the big things right should be your primary focus as you pursue financial success for your family. But the small stuff definitely matters too — especially when taking advantage is so easy.
You might not become a millionaire through perks alone, but only a fool leaves free money on the table. Today, there are so many great credit cards and bank cards that come with points, rewards, cash back, and other incentives that will make your money go that much farther.
This advice may seem to conflict with the goal of staying out of debt. But it’s all about control and making your cards work for you. Don’t fall for temptation. If you are too easily led astray, try not carrying your point-earning cards in your wallet and instead just using them for monthly bills that will help you earn rewards.
Financial Success for the Long Haul
There may be a lot of social media posts going viral about cutting out a morning coffee to save $1,000 per year. But, really, it’s mostly the simple, boring things that truly set you up for success. A few lattes probably won’t make or break you.
Start by setting a budget, living within your means, saving up, investing sensibly, and taking advantage of all available opportunities. Just by implementing these few behaviors — consistently for years and decades to come — you will be well on your way to success.
It might take a while to get there. But when you’re in this life for the long haul, having confidence you will definitely arrive at your goal is much better than risking it all on some uncertain shortcut.
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