Good morning! Today I am pleased to welcome Jonny Pean who is a veteran financial blogger with a vast array of blogs on money management tips, insurance, loans etc to his credit. With digital marketing as his forte Jonny Pean loves to explore the various facets of World Economy as well. His interest in finances dates back to the time when he had started his career as a finance writer around 4 years back. Let me know if you would like to guest post on Savvy Scot.
The root of successful wealth building lies in the antiquated notions that our parents have passed on to us— save money, work on a budget and learn to calculate your retirement costs properly. The value of proper financial management, imbibed in our childhood lays the foundation for a more consolidated financial future ahead. However, there is a subtle difference between just being at par with your finances and having a huge amount of wealth. It’s true that saving and investing are the two areas of focus while you’re planning your finances. But there is one major rule of making it big with finances—- taking risks. Yes, you’ve gotto take risks and to experiment with variant choices in a bid to “succeed” with your finances. Your control over money should be a result of you being able to take calculated risks.
Robert Shemin, the author of “How Come That Idiot’s Rich and I’m Not?” opines, Everything in life has a risk and a cost for doing it, and a risk and a cost for not doing it. Rich idiots focus on the risk of not doing something.” Quite true. Yes, you cannot really aim to hit the jackpot if you are not taking a shot at it, to start with! However, there are experts, who suggest that learning too much about finances makes you unnecessarily fearful about taking action—you’re possibly overwhelmed by the risks involved in commercial or financial experiments and this is something that holds you back from heaping on your funds. However, we will suggest—don’t take blind shots. Take risks, make guesses but make sure that it is backed by due education. For instance, getting in to stocks without being aware of its risks, would only be considered a dear mistake instead of a worthwhile shot at fortune. Striking a balance between awareness and your ability to take risks would be key. Here is some more of personal finance advice on ways to get rich.
Realize the true nature of debts
Realize that debt is a bad habit—at times- more than being a necessity. Simply getting rid of your present debts would hardly help. Realize that it has the power to enslave borrowers— so much so that there are instances of people committing suicide owing to the failure of debt repayments as well. And all those financial risks, so far been talked about here, can only be taken when you see your college expenses, car, house etc being paid in full. Learn the policy of stealth wealth. Stash away some money in bonds. Learn the art of keeping your financial truth away from your friends, family by avoiding taking debts from them and stealthily work your way up.
Anticipate your Retirement Costs
Keeping a tab on savings, having control over unnecessary expenditures, investments in bonds and planning your retirement costs— all this seems too much– right? But that’s how it goes. Continuing on our point that you need to strike a balance between calculations and impulse, we would like to stress on the need for saving up for retirement as well. Multiply your present costs with 25 and that’s what you would require in your post retirement days with the growing healthcare costs and possibilities of inflation. And whoever has told you that you can forego your future just in order to splurge now, might as well brush up his finance skills a bit.
Other Tips
Besides the ones already mentioned above, there is a bevy of other money spinning tips to be followed:
- Start earning from as early as possible and start off with a 10 percent (of your salary) saving goal—deposit them in a savings account since compounding interests are crucial for reaching the $1 million mark
- Make the most of your 401k
- Keep a minimum of 3 months’ savings in the savings account
The biggest tactic I always discussed with my personal finance students was to start investing as early as possible. Time is such a critical factor when it comes to building wealth. Someone who starts investing in their early 20s is almost assured of creating vast wealth if they continue doing so into their 60s…provided they make other wise choices in other areas of life along the way.
Brian @ Luke1428 recently posted..Our Local Target Is Showing How to Rock Customer Service
What I didn’t realize before was how much debt was weighing me down. I always used to carry a balance because paying the minimum was so much easier. But I wasn’t thinking about how much money I was giving the credit card companies by doing so. And this is the main reason why my balance wasn’t going down at all – it seemed as if it was going up every time.
I’m glad I’m not that guy anymore and all I needed was a little education and be a little smarter about my finances.
Aldo Rancier @ MDN recently posted..Guest Post Today at CNA Finance – How Haggling Saved Me $1,200
My husband and I have been working on building our savings since we had to use some of it to pay off a credit card (not by choice…). We are getting closer and closer each day!
Michelle recently posted..I Don’t Want to Be Rich
Trying to figure out the right total investment level is something I’m still evaluating. Current spending will not be reflective of costs in retirement – less gas, less business expenses, less car insurance, less utilities and property taxes if we downsize. However, we do want to travel a bit, so need to add this to the budget. Then there are the tax implications to consider. I’m thinking we need 60K annually before tax, to live on 50K after tax or 4K per month which means we need $1.3m in investments. I will continue to assess this but that’s where we are headed at the moment.
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Starting as early as possible is key. The longer you have for your savings/investments to grow the more you can take advantage of compound interest.
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My husband and I starts to build our savings for about 3 years. It is really good to save at an early time before it’s too late. Money is very vital nowadays.
An awesome hack with regards to retirement: many tropical jurisdictions are considerably cheaper than the Western World, and some even have active programs that encourage migration by retirees (like Malaysia)…
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Luckily I got an early start on savings, and that early start included me having an understanding of compound interest rates…so savings accounts have always been taken advantage of. Thanks for the tips!
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