Freedom Life Planning

The Ultimate Guide to Financial Planning

Top 10 Financial Tips for Success

Looking to improve your financial situation and move faster towards your goals? In this article, I list my top 10 financial tips for success towards achieving your financial goals. Whether you are planning early retirement, to buy your first home or just get rich, these tips and tricks will help you get there sooner. If you have any more to add to the list, add your comments in the section below.

1. Make a Financial Plan

The first financial tip is really the first step you should take to achieve success, that is, to make a plan for it. You don’t get into your car and start driving away before having any idea where you are going. You don’t go to the airport before you know what destination you are travelling to. Well why would you make financial decisions without having any idea of where you are going? You need to make a financial plan that gets you to where you want to be. It won’t be the same for everyone. You need a plan custom built for your life. Investing strategies are useless if there is no goal in mind. Check out this article for advice on making a plan. Once you have your plan well ironed out, then come back and focus on the remaining tips.

2. Control Your Spending

Controlling your spending is extremely important. Regardless of how much you make, if you spend all of it, you are left with nothing. There are many cases of professional athletes and movie stars such as Nicolas Cage making a ton of money but having even more excessive spending habits and ending up broke. You need to make a budget and spend what is appropriate for your savings goal. Controlling your savings works in two ways. First it allows you to set aside money to use for investing. Secondly, it requires less investment to sustain your lifestyle for financial independence. Check out this net worth article for more on that.

3. Maximize Your Earnings, Focus on Advancing Your Career

Once your savings are under control, the next logical step is to focus on increasing your income. For most of us, we work our jobs and earn a living from doing so. When you are at work, focus on what you are doing and doing it better. Get noticed by your management and work towards advancement. When you go to work hungry for advancement instead of just getting through the day, not only will you end up achieving advancement sooner, but your work days will go by faster. Don’t just sit back and look at the clock and cry about how long days are feeling. There should not be enough time in the day for you to do all the things you want to do. Get noticed for your hard work. Work hard when at work so you can play hard when you are at home.

4. Invest Your Savings into ETF funds

So now you have maximized your income and got your savings under control. What’s next? Well now it’s time to invest those savings for your future goals. Investing isn’t a one strategy fits all. Generally speaking the number one determining factor for investing is whether your goals are long term or short term. That will determine your asset mix between stocks and bonds. Check out the investment articles on this site for many tips and advice on how to invest along with learning about the different investment vehicles.

I recommend that you invest your savings into a diversified mix of broad market ETF index funds. ETF index funds spread out globally over thousands of companies will greatly reduce your investment risk. For shorter term goals, add some bond ETFs to the mix for stability during those tougher years of bear markets. Why ETFs? Well ETFs have significantly lower management fees than mutual funds. Check out this article for more on how keeping your fees low can greatly improve your long-term investment returns.

5. Take Advantage of Tax Sheltered Investment Plans

Most governments offer tax sheltered or tax deferred savings plans. Some companies offer pension matching plans. Take full advantage of all these special accounts that get you ahead faster than if you were to invest in a regular account. The difference by reducing your taxes can be even greater than reducing your fees. You may not be able to predict future investment returns, but you can predict that regardless of that, tax sheltered accounts will put you further ahead.

6. Stay Disciplined

This applies to everything in your financial plan. Stay disciplined in your spending habits, in your investment strategy, in your career path and so on. A plan is only effective if you stick to it. If you were to start driving to work and then decided to turn left instead of right and head in a different direction every 3rd turn, how do you expect to ever get to where you are going. Stay the course.

7. Don’t Follow the Herd, Focus on What is Important for You

Not as easy as it sounds. Life will be full of temptations to follow the crowd. But if you want to achieve more success than the average person you need to behave differently from the average person. You may see your friends spending a lot on fancy cars, restaurants and vacations, but if these are not in your financial plans, don’t blindly follow. Maybe your friends currently have higher incomes than you and can afford these expenses. But most likely, they can’t and you will start to pull ahead financially in the future if you stick to the plan. Normal behavior will yield normal results. Be unique in how you approach life and you will achieve excellent results.

8. Own Your Home

Buying and owning your home is an excellent way to build a sound financial future. Once you purchase your home, the cost you owe is now fixed. It won’t rise with inflation like rent and a large portion of your mortgage will be going towards equity in your home. Even if your home value only rises with inflation, your mortgage will not and all those inflationary gains will be pure equity gains for you.

9. Avoid High Interest Debt

High Interest debt is a big no-no. Do not carry forward credit card debt and pay off all your high interest loans like they are poison! These poisons will quickly crush your financial plans and set you way back. The only good debt are mortgages and low interest loans and lines of credit. If your loan interest rate is more than 2% higher than your mortgage interest rate, it is bad debt and must be eliminated immediately.

10. Monitor and Track Your Progress

Review and monitor your progress to ensure you are going in the right direction. You need the feedback to ensure you are going in the right direction. I suggest tracking your income, your spending and your net worth. Also for your investments, determine your personal rate of return. Run your personal finances like a business and ensure it remains positive and on track towards your financial goals.

Follow these 10 tips and you will achieve financial success. Have anything to add? Write in the comments below.

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