I just read this in a publication I received in the mail today. I found the online version:
https://www.americanfunds.com/pdf/mf...2_magazine.pdf (start page 11)
It is a good follow up to what I was posting about in this thread. All of you people who blow this stuff off now, you going to be kicking yourself in the ass in 20-30 years from now
Six ways to pursue your financial goals in the next decade and beyond
When asked to reveal the biggest issue that stands in the way of his clients’ financial success, a longtime financial adviser found it difficult to narrow it down to just one. Instead, he ticked off a list of common mistakes, ranging from short-term decision-making to trying to time the market to living beyond one’s means.
All these roadblocks, he noted, can be avoided with a common solution: Develop a realistic financial plan and stick to it.
It’s a familiar refrain to those of us who have taken the time to outline our longterm
goals and develop a basic strategy to achieve them, and yet still found ourselves
off track. A key problem is that many of us may lack the basic day-to-day skills needed
to neutralize some of the challenges that invariably arise.
As we enter a new decade, consider implementing some of the following strategies
into your financial plan. By doing so, we believe that you will have a better chance at achieving your financial goals over the next 10 years.
1. Understand where your money is going.
We all know that creating a budget plays a key part in ensuring financial health, no matter what your income. Yet it’s a step many of us don’t take, for reasons ranging from procrastination to denial. But ultimately there’s no substitute for getting a grasp on where your money is being spent. The good news: Getting started isn’t that hard. Advisers can often provide budgeting templates, and many free worksheets can be downloaded from the Internet. In addition, most personal finance software offers budgeting functionality. In terms of compiling data, strive for accuracy and thoroughness. One adviser asks her clients to track expenses for a handful of different months in order to capture less frequently incurred expenses such as quarterly insurance payments, taxes or holiday travel. Once you’ve developed a budget, consider the following steps for staying on track:
Revisit your costs at a set time each year. The best-run companies constantly re-examine how and where they spend their money. When they find opportunities to lower costs, they do. As individuals, however, we often let the perceived inconvenience of switching insurance providers or cell phone carriers stand in the way of reducing our expenses. But this cost-cutting approach to your personal finances can really pay off. As an initial goal, focus on reducing your expenses by 5% to 10%. Then, every year at an appointed time, revisit your budget with the aim of keeping it from rising. At a minimum, make it your objective to let your expenses rise at a rate slower than your income growth.
Increase your payment frequency. At one time or another (and that time may be right now) most of us have systematically chipped away at debt only to find ourselves back in the same position a few months or years down the road. Staving off debt is not a “one and done” event but an ongoing commitment requiring vigilance and systematic effort. If credit cards are your downfall, get rid of them. But if you’re unwilling to part with your plastic, limit it to a single card and be dogged about paying off your balance each month. To make doing so easier, one adviser suggests that rather than paying credit card bills monthly, do so each time you receive a paycheck. That way, the amount you owe at any one time becomes more manageable, and the temptation to carry a balance is reduced. The importance of keeping revolving debt in check cannot be overstated. According to one adviser, “In my experience, the aftereffects of accumulating significant revolving debt can set one’s finances back 10 years — five if they’re lucky.”
Make room for investing. The important “pay yourself first” dictum means that saving and investing should be part of an overall budgeting strategy, not simply afterthoughts to be considered once the bills are paid. Make saving and investing a “cost” on your budgeting worksheet.
2. Avoid lifestyle inflation.
Read the rest here:
https://www.americanfunds.com/pdf/mf...2_magazine.pdf it starts page 11. A good 5 minute read at most, well worth your time.