If you hold down a steady job with a decent paycheck your income is most likely the key for achieving financial security.
However, there are other things that help to reinforce and make chances stronger for potentially achieving your financial goals.
The hard truth is that your income lasts only as long as your employment and the importance of turning your income into wealth cannot be overstated.
Three steps you can take which can help convert earnings into savings are:
- Live below your means. If you spend every dollar you make or more you will likely never achieve financial security. So, you should save on a regular basis. You can start out with a goal that is right for you, for example 10% of your annual income. Then increase 1% annually until you reach 15%. This way as you earn more over your life time you will be saving more. You can use investment vehicles such as Individual Retirement Accounts, employer sponsored 401ks, or Non-Retirement Accounts. Work with your financial advisor to determine what may be best for your situation. The key to this is starting early and sticking to your plan. With time on your side and good habits it is more likely you will have success.
- Keep it simple. Instead of employing complicated strategies, work with your advisor to create a straight forward and easy to evaluate plan that you are comfortable with and that you understand.
- Stay the course. Starting your plan is the first step but sticking to it is the hardest part. It is possible there will be times in your life you may feel tempted to stop your good habits. You may suffer a job loss or experience a major family change like having a child. Just remember that when you want to abandon your plan most is when you should stick with it. Being resourceful and having perseverance will allow you to find other ways to save even in difficult times.
Financial security can be like swimming toward the horizon if you do not create a plan and stick to it. Working with an advisor to create your own plan can help to create a sense of ownership over your financial future. It is very easy to allow "life" to get in the way of planning but if you can keep your focus you will be much happier in the long term.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).