A better financial life in 3 easy steps

Posted by: Marie@Bicycle, Tuesday, Jun 14, 2016

The road to financial success may include some twists and turns, but it doesn’t have to be complicated. Today there’s a lot of heated advice and dire warnings about how best to manage your money. But here’s what I know for sure: whether you have gobs of cash or you’re just getting warmed up, you can boil it all down to three simple, indisputable, practical items. Here’s how you can improve your financial life right now. 

     1. Automate your savings.

Why do it the hard way when you can do it the easy way? If you want to get ahead financially, start having money automatically withdrawn from your paychecks. After a couple months you won’t even notice – but in a year or so you’ll sure notice the little pot of gold you’ve built up.

Do it now: Get an app, contact your employer, use online banking, or do whatever it takes to automate your savings.

     2. Keep a lid on debt.

A little is okay, a lot is going to chip away at your financial health and frazzle your nerves. Who needs it? Make a plan to reduce your debt if your monthly payments eat up more than 36% of your paycheck. Pay special attention to credit cards, which typically have outrageous interest rates.

Do it now: Use cash whenever possible, pay existing balances off or down, cut up all your cards except one.

     3. Invest for the future.

Nowhere is the hype more glaring than the topic of investing. The truth? If you stick to two basic principles, you can be a successful investor. First, you want a mix of investment categories, such as stocks and bonds. Second, you want a mix of specific investments within each category. Warning: picking individual stocks is not a good use of your time, and usually leads to disappointment.

Do it now: Invest your 401(k), IRA, or other long-term savings in Target Date Funds, an easy way to assure your investments are diversified and stay balanced.

 

The people who are at peace with money didn’t get there by winning the lottery. They got there by taking action, no matter how much they had available to save. By focusing on the Big Three, most of the time things work out. It’s reassuring to have a financial philosophy this simple.