![]() Delays in paying off this type of outstanding debt can increase your interest burden over time.Īlways aim to pay high-interest debt first and avoid living beyond your means by saving up to buy where possible instead of buying things on credit. High-interest debt generators, on the other hand, like credit cards can impede your wealth-building strategy over the long term. Be Smart When Using Credit and Debt FinancingĬredit and debt can be useful tools for short-term needs and ‘good debt’ such as mortgages and car financing is used by millions of people to achieve their purchase goals more quickly. While you might not need to see an expert right now, keep in mind advice from professionals in the field is money well spent and will help you make the right financial decisions in the future. These experts know the latest tax and legal changes, so they can help you with everything from minimizing your taxes and maximizing contributions to structure your wealth-building vehicle for optimal tax outcomes.įinancial experts can also introduce you to investment and savings products you might not be aware of. Get Advice When You Need Itįinancially savvy people also know when to get advice when they need it, whether it’s consulting a tax expert, accountant, or financial planner. Given the concept of compound interest, this will have you maximizing the power of your money over the long term. Always pay yourself first, and then save for specific purchase goals – such as a vacation or a new car – on top of your regular savings habit. The financially savvy are super disciplined at saving, and many pay themselves first by putting away 10%, 15% or more of every paycheck. This is extra money you can use to invest, pay off high interest debt, or start another side business project. While it doesn't sound like much, an additional $500 a month translates to an extra $6,000 over the course of a year. Don’t discount things like renting out your spare room or using extra downtime for some freelance work. ![]() Start small by exploring your hobbies and talents. The financially savvy aren't just cutting back in small and large ways they’re constantly on the lookout for ways they can generate an extra $500, $1,000, or more each month. Whether you’re working on that e-commerce idea or driving for Uber in your spare time, additional streams of income will boost your savings and wealth by not just cutting back on spending, but by maximizing your earning power. Since we are talking about increasing purchasing power, how about finding additional income sources? As they say, if you can’t pay cash, that means you can’t afford it. If there are items that you really need to purchase, you can check on other cheaper alternatives or wait until you have more money to use for it. In reality, you need to live well beneath your means. Related to no.1 above, this means living within your financial capacity, or income. Budgeting doesn't have to be time consuming or complicated, and there are hundreds of apps or free spreadsheet templates that you can use to start budgeting today. Your budget also lets you track, review, and adjust your spending and saving habits. You can use it to guide your behavior and make smart choices about everyday spending. On the other hand, your budget sets out the day-to-day things you need to do to achieve your long-term plans. Your plan identifies what you want and tells you how to get there. Your plan encompasses both long and short-term goals, and it includes leisure and purchase goals (such as vacations, house, and a car) as well as investment goals. ![]() If you want to achieve your financial and wealth-building goals, you must have a plan and a budget. Whether you are starting out with setting your financial-building goals or trying to get back on track with your finances, the following top tips of the financially savvy are sure to change your life: 1. A budget and a long-term plan clarifies your goals and guides your day-to-day behavior so you can avoid leaving your finances to chance. To be financially savvy, you should have a plan for the future and manage your cash flow with a budget. Those who are great at it don’t have to make huge sacrifices, but still manage to enjoy a high standard of living while traveling and pursuing a range of hobbies. But a common trait that the money-smart share is an affinity for long term financial planning and goals. Being financially savvy will mean different things to different people.
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