2016…a new year. With it comes new ideas, new opportunities, new relationships and new resolutions. But that doesn’t mean that we should forget about the “old” stuff, especially the stuff that works.
In the upcoming weeks and months I plan on expounding on some time tested money laws and going much deeper with strategies but for now, here are 5 that will never steer you wrong:
1. CREATE/GROW YOUR FALLBACK FUND: Life will always happen and for most of us it does so at the most inconvenient moment. That’s why without some type of savings to handle the inevitable hiccups that occurs your long-term plans can be in big jeopardy.
An emergency fund not only provides a sense of peace and comfort but it also helps you avoid dipping into your child’s education savings or your retirement accounts to pay for unexpected emergencies or unforeseen bills.
2. USE CREDIT WISELY: Let’s face it, paying for something with cash today almost feels foreign. Who does that anymore? Credit cards are a way of life, they’re convenient and easy but they also have a way of tempting you to live a lifestyle you can’t afford.
Credit, used properly, can provide convenience and peace of mind in knowing that you’re covered in the case of an emergency.But the temptation is great to live outside of your means and worry about paying for those purchases later. The fewer credit cards you sign up for, the less you’ll be tempted to spend away your future financial health.
3. KEEP GOOD FINANCIAL RECORDS: I’ll admit that I’m not the most organized person in the world but this one good habit will go a long with in growing your finances because the fact is you can’t grow what you don’t manage. One of the simplest and most productive habits you can incorporate into your personal financial success plan is to maintain good financial records.
Keep track of everything that goes in and out of your account and use online resources like Mint.com to assist you. At the end of the month, compare your records to your bank statement to test your accuracy. This simple step will help you be less tempted to waste money on impulse purchases.
4. REDUCE YOUR EXPENSES: Let’s be honest, there’s no secret to a successful budget. It’s as simple as keeping track of your income and expenses, increasing your income or lowering your expenses until you spend less than you earn, while also saving for a rainy day.
Reducing your expenses may just come down to changing some habits, making a few tweaks or completely overhauling your management style and/or your current focus. Whatever the case, it doesn’t matter how much is coming in the front door if you are not preventing it all from going out the back (my book the Consumption Trap can help reduce your expenses).
5. DON’T GIVE IT ALL TO YOUR UNCLE: Now of course I’m speaking legally but in my opinion everyone needs to be conscious when it comes to paying as little taxes as possible. Minimizing your taxes is work that’s well worth the effort. Everyone should pay as little in taxes as possible.
Unless it’s for a charitable cause I suggest that you don’t just give away your money – and the IRS is not considered a charitable organization. That means you need to find the tax loop holes and shelter as much of your hard earned money as you possibly can legally!
Every game has rules, strategies and laws; money is no different. Which ones have you been following? Which have you been violating? Follow these laws and you’ll be well on your way to mastering money. So start the year off on the right note and commit to making your wealth shift in 2016.
Happy New Year!