Saturday, 13 April 2013

Keys to Financial Success

Although making resolutions to develop your financial situation is a good action to take at any time of year, most people find it easier at the beginning of a new year. Regardless of when you begin, the basics remain the same. Here are top keys to getting ahead financially.

1. Get Paid What You're Worth and Spend Less Than You Earn

It sounds simplistic, but some people struggle with this first basic rule. Ensure you know what your job is worth in the marketplace, by conducting an analysis of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company, for what you do. Being underpaid even a thousand dollars annually may have a significant cumulative effect over the course of your working life.

No matter how much or how little you're paid, you'll never succeed in case you spend more than you earn. Often it's much easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can lead to big savings. It doesn't always have to involve making big sacrifices.

2. Stick to a Budget
One of the best subjects: budgeting. How can you know where your money is going if you don't budget? How can you set spending and saving goals if you don't know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars annually.

3. Pay Off Credit Card Debt
Credit card debt is the primary obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it's so simple to forget that it's real money we're dealing with when we whip them out to pay for a purchase, small or large. Despite our good resolves to pay the balance off quickly, the reality is that we often don't, and end up paying much more for things than we would have paid if we had used cash.

4. Lead to a Retirement Plan
If your employer has a 401(k) plan and you don't contribute to it, you're walking away from one of the best deals out there. Ask your employer if they have a 401(k) plan (or similar plan), and register today. In case you're already contributing, try to raise your contribution. In case your employer doesn't offer a retirement plan, consider an IRA.

5. Have a good Savings Plan
You've heard it before: Pay yourself first! If you delay until you've met all your other financial obligations before seeing what's left over for saving, chances are you'll never have a healthy savings account or investments. Resolve to reserved a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.

6. Invest!
If you are truly contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better.

7. Maximize Your Employment Benefits
Employment benefits such as a 401(k) plan, flexible spending accounts, medical and dental insurance, etc., are worth big bucks. Be sure that you're maximizing yours and taking advantage of the ones that could save you money by reducing taxes or out-of-pocket expenses.

8. Review Your Insurance Coverages
Quite a lot of people are talked into paying too much for life and disability insurance, whether it's by adding these coverages to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents. However, it's important that you have enough insurance to protect your dependents and your income in the case of death or disability.

9. Update Your Will
70% of Americans don't have a will. If you've got dependents, no matter how little or how much you own, you need a will. In case your situation isn't too complicated you can even do your own with software like WillMaker from Nolo Press. Protect anyone you care about. Write a will.

10. Keep Good Records

If you neglect to keep good records, you might be not claiming your entire allowable income tax deductions and credits. Setup a system now and apply it all year. It's much simpler than scrambling to find everything at tax time, only to miss items that might have saved you money.



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