Nine Habits of the Financially Secure Aristotle said, “We are what we repeatedly do. Excellence is not an act, but a habit.” Athletes and leaders preach the importance of discipline and consistency. And it turns out that people who are financially successful have some powerful habits in common, too. Consistency Delivers Results: Like any successful endeavor, accomplishing financial goals involves time, attention and focus. Our research and experience with financially successful people, including our clients, points to several key behaviors that they tend to display on a regular basis. Here are some tips for following their paths to financial freedom: • Establish and Follow a Budget Financially successful people tend to manage their money carefully and conservatively. They recognize that early planning can help establish strong financial boundaries that guide life decisions and pay off long-term. In our 2011 Stick with It Study, individuals with higher incomes were associated with higher levels of budget discipline and tended to rank themselves high in that area. • Focus on the Long-term People who are prepared for the future understand that whatever they spend today can have a significant impact on their assets 10 years from now. They follow a long-term financial security plan, based on a thoughtful process of defining personal and financial goals and drawing the roadmap to reach them. This approach gives them confidence that they are on track, even with a challenging economy. • Live Frugally Research on high-net-worth individuals suggests that many build wealth – and then maintain it – by making frugal choices, living below their means and keeping tight control on expenses. Their choices may include driving used cars, shopping at standard retailers and living in middle-class neighborhoods when they can afford much more, then setting aside what they have saved. • Start Early With lead time, you can multiply your assets through the power of compounding. But starting early also has other financial advantages. When you buy life or disability insurance as a young, healthy person, you can lock in insurability before health or other concerns arise. It is very economical to establish permanent life insurance for a child: you protect insurability and build cash value that can be used later in life for education, a home down payment or other financial goals. • Save Consistently Forming strong savings and investment habits early in life is good practice for making consistent contributions toward your long-term goals such as retirement. One source estimates that high-net-worth individuals save and/or invest between 15 and 35 percent of their income each year. It is never too early or too late to begin saving, but doing so consistently will help you see better results. The earlier you begin, the more you can accumulate to support your short-term goals and future dreams. • Set Goals Day-to-day success comes from working toward milestones, one step at a time, until you reach your goal. Our research found that higher-income respondents had the longest term financial goals and were most likely to achieve the goals they set. Another study found that setting small, interim goals was the success strategy most cited by respondents (67 percent). • Spend Time Planning Your financial plan starts with your lifetime goals and dreams, considers your current situation, and plots a roadmap of how to get from where you are to where you want to be. Financially successful people do more than create and follow the plan, they engage with it by spending considerable time studying, planning and following their investment results, and adapting as necessary. • Protect Your Family from the Unexpected Financially secure individuals understand the importance of managing risk and put protections in place to ensure that their important goals can be met even if the worst should happen. A foundation of insurance to manage these risks includes disability insurance, to protect from loss of income; life insurance, to protect from loss from premature death; annuities, to ensure lifetime income; and a strategy to handle potential expenses for long-term care. • Work with Professional Advisers Successful people understand their own strengths and tap the expertise of other professionals for advice and guidance to make the most of opportunities available. A Northwestern Mutual financial representative has exclusive access to a network of specialists in areas such as estate and business planning, insurance and investments, as well as leading products and services to meet your goals. Provided by: Ryan W. Williams - Financial Representative, Northwestern Mutual ryan.w.williams@nm 530-448-6452
Posted on: Wed, 14 Aug 2013 23:41:52 +0000
Trending Topics
© 2015