If only it were that easy right? If only reading one article on financial freedom doubled your savings account and eliminated all your bills, that would be perfect. Unfortunately, financial freedom doesn’t come without some elbow grease and headaches.
Here are the Top 5 Do’s and Do Not’s that will help free up cash to create a bigger savings account:
Do’s
1. Do use your 401k at work. The biggest mistake people make in getting themselves in trouble is trading the future for today. Surveys show that $50 saved today is worth hundreds if not thousands in forty or fifty years. If you want to be able to eat something other than tuna fish when you’re 75, find out what kind of 401k plan your company has and invest as much as you can.
2. Do call a financial planner. Sure, budgeting and balancing your checkbook are helpful, but mechanics are for cars, plumbers are for pipes and financial planners are for finances. Bring in an expert, paying someone $200 now could save you thousands and year, and make you even more over the course of your lifetime.
3. Do increase your financial IQ. No more rolling your eyes at the stock market report, no more skipping the business section of the paper to get to sports, no more passing up financial tips websites. Take a class, bring your significant other along, read about personal finances, learn about stocks, ask as many questions as possible. Educated investors make better decisions and are less apt to fall for scams and bad deals.
4. Do use coupons. Okay, pride, ego and vanity murder your budget. Wanting to shop for brands so your shirt’s tag shows who you are is the perfect way to ruin your credit, run up debt and end all chance at getting some breathing room before you retire. Use coupons at the grocery store, shop for clothes you need when they’re on sale, shop at discount stores for items people won’t see (socks, underwear, napkins, etc.) and save splurges for only certain times of year or certain stores.
5. Do save. Budget your savings, treat it like a bill. Start a separate account so you can write a check to your savings account. Do what you can to create a culture of savings in your life, tear yourself away from the idea that new appliances and technology show your wealth. Wealth is measured over time, not over how many channels you don’t watch at home.
Do Not’s
1. Do not go to Starbucks. There was a time, and this may seem strange, when spending $8 on coffee and a pastry was idiotic, that time was 1995. $8 a day for work is $40 a week, that’s $2,000 a year on coffee and scones! Put that into a 401k, and without any interest at all, that would be $40,000 in twenty years.
2. Do not ignore your bills. They scare you don’t they? Yeah, they scare all of us. But, if you ignore them they only get worse. Open them, read them, pay them. Even if you can’t pay the full amount on a credit card bill, it’s better to pay a little bit and at least build a relationship with the credit card company which you can leverage in the future.
3. Do not buy ten DVD’s a week. This sort of goes with the Starbucks point, but Americans spend so much money on movies that sit on their shelves, music that sits on their shelves, channels they don’t watch, technology they don’t use, etc. Status is your enemy, not your friend. Don’t use status to measure wealth, use freedom. Are you free enough to quit your job and not work for two years? No? Then you’re not wealthy.
4. Do not eat out. Eating lunch out could cost you $3,000 - $5,000 a year, on top of your food bill. This is especially true in urban centers that have lunch places with high rents such as Manhattan, Los Angeles, Chicago, Boston or Miami. Your $9 sandwich and $3 soda pays their electric bill and drains your wallet. Let them take someone else’s money, try bringing a sandwich four times a week and eat out on Friday’s with co-workers.
5. Do not procrastinate. It’s March, 2008. How many months have gone by since the last time you wanted to fix your finances? That’s thousands of dollars lost in interest alone. Buy a book, take a seminar, meeting with your banker or financial planner, but do something to fix your finances, and do it quick! Time is of the essence, in fact time is the one thing that will always run out no matter who you are, so make the most of it.
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