Let’s start at the very beginning….. A very good place to start….. When you read you begin with A- B- C when you sing you begin with Do Re Mi…… The Sound of Music
Beginning can be difficult especially if you feel like the task at hand is confusing. But beginning to build your wealth can be very beneficial for your future and extremely helpful for the present. Gaining control of your finances can be very rewarding and learning some simple steps can help guide you. Doing so will help you focus on what is truly important to you and reduce the everyday stress to allow you to live a more fulfilling life.
Here are five ways to begin the process of building your wealth:
- Eliminate consumer debt – Carrying large balances on credit cards is a bad habit and can be quite costly. Begin today to keep your balances low and resist the temptation to buy items on credit. The exception to this is mortgage, college and possibly auto loans which are scheduled expenses and should be included in your monthly budget.
- Build your cash reserves for a total of 6 – 12 months worth of spending. Having this reserve will bring comfort to the stress of daily living knowing that there is security in having cash saved. Begin building this reserve today. It is the antidote to the fear of investing in the stock market.
- Participate in your retirement plan at work to the maximum extent that is permissible on a pre-tax basis. Invest these contributions in a diversified portfolio with a healthy percentage in the world’s stock markets to increase your retirement savings. Your future self will be grateful for the planning and allow you to live a more comfortable retirement.
- Invest in an IRA, if eligible. If you do not have a retirement plan at work, most people benefit from a traditional IRA unless you are in a low tax bracket or are not eligible to invest in a deductible IRA, then choose a ROTH IRA. Either way, this saving will allow you to build your wealth for retirement. Don’t forget about the spousal IRA.
- Create a diversified portfolio and re-balance when necessary. Keeping focused on your long-term goals and staying patient and disciplined with your plan is key to building your wealth. Work with a financial behavior coach who will help you have the necessary patience and discipline. This discipline includes re-balancing to target allocations at least yearly.
Begin today to build your wealth with these simple steps. And go watch The Sound of Music for inspiration!
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