Take Charge of Your Money Right Now
Taking charge of your money is critical, if you want to build wealth over time.
It’s important to have good money management habits, and create a monthly budget. Think carefully about what it takes to balance your finances, and to build a savings balance.
Working toward stress-free financial management can make a huge difference in your life. The more you do to take charge of your money, the better off you’ll be moving forward. Use these tips to help you look after your money right now.
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Contents
Hire an Accountant
An accountant is the perfect person to help you with cash management, finance, and your tax returns.
Think hard about what an accountant can bring to the table, and how they can help you to make better decisions for the future.
Use this site to apply for a loan Find My Rate at Social Finance Pay off credit cards or invest in a major purchase
Change Is Hard
The reason that people don’t diet, don’t exercise, and don’t resolve bad personal relationships is that change is hard. As a result, we don’t really, truly change and grow unless we’re in real pain. When we’re at that point, the pain of change is less severe than that pain of not changing.
With discipline and time, I think most people can accumulate far more wealth than they think is possible. But growing wealth requires change- which is precisely why most people don’t make the effort. The changes I’m suggesting involve an old friend:
Delayed Gratification
Some decisions are relatively small:
- Dropping a subscription music service and just listening to the free version (Pandora, for example).
- Making coffee at home two days a week, which means that you stop by Starbucksless often.
- Buying afew more generic products when you go to the grocery store and Target. (I’m not going generic on salad dressing, however).
Since these are smaller decisions, the amount of gratification you’re delaying is small. You don’t mind listening the commercials on Pandora (I certainly don’t- I just turned down the sound), and the coffee at home isn’t bad.
Other decisions are much bigger. StudySoup wrote this great article on the average amount of money a college student saves by having a roommate. The average savings over four years is over $15,000. Now, having a roommate is a big sacrifice, because you lose a fair amount of privacy. If privacy is really important to you, it’s a true delay of gratification (until you graduate, get a job and can afford to live alone).
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So, What Do I Get?
OK- so what do I get out of all this delayed gratification?
You build wealth- which can give you peace of mind.
Here’s a practical example: By making changes to your spending and building a savings account, you create a $1,000 emergency fund. If your car brakes down, you can pay for the repair. Curbing your spending and cutting back on your spending is critically important
Once you create a budget and build a saving account for emergencies, you can use the excess dollars from your monthly budget to start investing.
You can choose from a number of investments, including modern homes , real estate, stocks, and bonds. Here some comments on stock investing, which may be the most common investing tool.
Common Investing Mistakes
If you were an investor in the first few weeks of February of 2018, you probably want to visit a place like Anger Room.
“Redirect your frustrations and take it out with us…safely.”
It’s a real thing.
The huge swings in stock market performance may have you wondering if you’ve made some huge mistakes, and that’s normal when investing tensions are running high. To assess whether or not you’re on track, here’s my list of the most common mistakes investors make.
Forgetting your investing goal (or not having one at all)
For starters, go back to the reason you started investing in the first place. Specifically, how much money were you trying to accumulate, and for what purpose? How long were you planning to invest?
Let’s assume, for example, that your investing now in a 401(k) retirement account, and that you’re 25 years from retirement. You’ll willing to take a moderate amount of risk. If your portfolio is up or down 10% in one year, you can live with it. A 25% change, however, makes your palms sweaty. You invested in mutual funds, with 70% in stock and 30% bonds.
That’s the plan- and that’s where you start.
Unrealistic expectations
As of 1/22/18, the Dow Jones Industrial Average (DJIA) closed at an insane 26,214.60, up 32.4% in the last 12 months. The DJIA is an index of 30 large corporate stocks. A broader index, the Standard and Poor’s (S&P) 500, closed at 2,832.97 on 1/22, and this is an index of 500 large stocks- a bigger basket of stocks. The S&P 500 is up 24.7% over the last 12 months.
Crazy, record-setting performance… and it’s stressful to consider the fact that every bull market ends. Expecting a 25%-plus annual return is simply not realistic.
It may seem like everyone around you is getting rich- but that’s normal. In every bull market I’ve seen since the ’87 market crash, most of us think that everyone else is making a pile of money.
But there’s a trade-off. The people who are really killing it in the markets these days are taking more risk (Bitcoin, anyone?). They either have larger percentage of their total portfolios in stock (vs. bond or cash), and they’re buying riskier stocks- stocks that have less of a performance history of earnings and sales.
You need to keep your head and realize:
- Your goals haven’t changed
- Bull markets, historically, come to and end at some point
- When (not if) the bull market ends, you may incur some losses in the short term
But you can get through it.
Plan and Educate Yourself
If you create a plan, start investing consistently, and understand risks and potential returns, you can build wealth over the long term.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
Co-Founder: accountinged.com
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/
(you tube channel) kenboydstl