Everybody would like to be financially stable, but getting there takes a lot more than just wanting it. First you need a solid plan in place, and then you need the discipline to execute that plan.
It won’t always be easy, of course. In fact, at times it may be downright stressful. Yet setting a solid financial foundation for yourself will set you on a course for financial freedom for the rest of your life.
Everybody’s financial situation is different, but here are four key steps that will help you meet your financial goals.
Get out of Debt
Many tips on this list are easier said than done, and getting out of debt is no exception. Of course everybody would love to live debt-free, but how exactly can you make it happen?
If you’re already living without debt, then move on. But there’s a good chance you are still paying for college, not to mention paying down a credit card or two — or three.
If you are dealing with debt on multiple fronts, it might make sense for you to consolidate it all into a lower-interest payment plan. Be sure to set aside a certain amount of each paycheck to dedicate to paying off your debt.
Also, try to keep expenses down until you pay your debt off. The longer you deal with any kind of debt, the more you’ll end up paying in terms of interest.
Make Some Investments
Once you’ve worked hard to pay off your debt, it’s time to start making your money work for you.
There are many ways to invest your money, so be sure to do all the usual online investigating to come up with a plan that’s right for you. Generally speaking, however, it makes most sense to diversify your investments to minimize risk and give yourself the best chance for long-term growth.
For example, depending on how much you’re looking to invest, it may make sense for you to split that amount up into three separate investments: a large-cap fund, a small-cap fund and an international fund.
Also, until you become comfortable with the ins and outs of investing, it might be best to stick to relatively low-risk options while you acclimate yourself. Once you become comfortable, it will be easier to give some higher-risk but higher-reward options a look.
Focus on Saving
Everybody says they’d like to save money, but it takes a tangible effort to make it a routine habit. Once you’ve become used to saving money from each paycheck, however, you’ll never go back.
Beginning to save is one thing, but increasing the amount you save is something else. The best advice here is to increase the amount you save anytime you’re given a raise. Whether it’s a bonus or an increase in your salary, commit to putting away more money before it even registers that you’re making more.
You won’t feel it on a day-to-day basis, and you’ll feel it in a positive way once you take a step back and look at exactly how much you’ve saved over a given period of time.
Confidence Is Key
Just like anything in life, a healthy amount of confidence can go a long way when attempting to meet your financial goals. You don’t want to be over-confident, of course, but there is some evidence that specific segments could use a morale boost when it comes to financial resolutions.
For example, a recent survey found that 42 percent of men age 25-34 believe they’re doing better than their peers when it comes to setting financial resolutions and goals. Among women the same age, however, that number is only 35 percent.
Also, men think they’re more likely to reach their financial goals than their health goals, while women tend to think the opposite. Confidence doesn’t guarantee anything, but it does make it much more likely that you’ll make financial progress than if you’re under-confident.
Try Not to Stress
Financial stability can be a stressful proposition regardless of your circumstances. Just keep in mind that there are other things in life more worthy of stressing over, and everybody has to deal with money issues. If you’re able to eliminate finances as a source of your day-to-day stress, you’re already well ahead of most people.