Financial Success

  It is hard in today’s world to get ahead and stay ahead financially. I have used some methods, during my working years, to not only get ahead, but stay ahead financially. I wish I would have figured out some of these tricks when I was younger. But I did, over the years begin to discover ways to make the most of my money, and avoid ‘giving’ it away.    

If you are recently out of school and beginning your first ‘real’ job, some of the thoughts presented below may be of value to you.   

I hope at least some of these ideas help you.   

1. Charge Cards, not Credit Cards.    There is nothing wrong with using charge cards as long as you pay them off every month. In fact, it is a convenient way for you to avoid having to carry a lot of cash all of the time.   

If you cannot pay them off completely every time the bill comes in, it means that you cannot afford the things that you are buying on these credit cards, and you will have to take the money from some other budget category to pay for them (auto, groceries, clothing, medical, etc.).   

In addition, if you do not pay them off every month, you will be incurring astronomical interest charges and credit card service fees ß money for nothing! If you pay them late, you will be charged late fees! Credit card companies have all sorts of ways to take your money, and give you nothing (no services) in return!   

On the up side; having a couple of current credit cards and paying them off monthly is a good way to build a good, positive    

2. Pay yourself first. Take advantage of company financial plans (stock purchase plans, retirement plans, etc.)   Most companies, and some school districts (I hope), will offer various financial programs to their employees. Many of these programs include ‘contributions’ by the employer. I.e.; purchase company stock at 80% of market value means the company is contributing 20% of the cost of the stock that you purchase. This is like money for free. Take advantage.

   Many a person has become a millionaire simply by participating in their companies stock program for as long as they have worked for the company (e.g.: My uncle Oscar and his hordes of Ford stock that made both Toni and Michael rich upon his passing. And, your mother’s godmother Florence, who owns more GM stock then god!). Also note that neither of these stocks is stellar performers. They are just everyday, solid, long-term holdings.   

3. IRA’s and 401(k)’s now will pay dividends for a lifetime.   For those of you recently out of college, here is an interesting bit of math; If you put only $2,000.00 per year into an IRA or 401(k) for the first ten years of your working years, then stop contributing, you will have amassed more money for retirement, at age 65, than if you had started saving after those first ten years.   

Of course, IF you contribute that same amount for all of your working years, you will have garnered even a bigger retirement nest egg.   

You might also want to give just a bit of thought to the fact that, if you have children, you can use a portion of those retirement funds to offset the cost of your children’s college education. Thus leaving them with less college debt to start their career.     

4. Don’t let Annual Bills sneak up on you.   So often the newly employed begin their budget planning with only accounting for their normal monthly bills (rent, utilities, groceries, gas, entertainment, etc.) Then, when property taxes, homeowners or auto insurance come due, they are suddenly behind the 8-ball and this ‘unexpected’ expense throws their entire budget out of kilter and puts them in unexpected debt.   

Here’s a way for you to avoid this pitfall: Collect all of your annual bills, or at least estimates of those bills. Then divide that total by the number of pay periods you have in a year (12, or 24, or 26, or perhaps even 52). That number will tell you how much money you need to put away each pay period so that you’ll have enough to pay those annual bills when they come due.   

Many companies allow you to divert a portion of your pay into an account other than your usual checking account. Take advantage of this feature so that you do not see that money each pay period, and yet is accumulating for you, when you need it.   

5. You’ll have a car when you graduate college. Start a savings plan now, so you can replace it, when you need to, without putting yourself in debt.   Most kids today have an automobile, already paid for by their parents, when they graduate from college. Many, if they don’t go to college, have some sort of car when they graduate from high school. Yes! It’s old and ratty, and the first inclination is to get a job, then run out and buy a new car.    

Try to avoid this temptation. Ask yourself; does this car do what I need? Does it get me to where I want or need to go? Can I live with this car for just a bit longer?   

Now, figure out how much you can afford for a car payment. Take this amount and save it. Try to save a car payment a month. Put the money into a savings account, and save that money for as long as you would otherwise make a car payment. Then, after just a few short years, you’ll have enough saved to buy that car that you want. Even if you do not have enough to buy the car outright, or if your car quits before you’ve saved the entire amount, you’ll have a good down payment on that next car, AND significantly lower your car payments.   

But, don’t stop now. If you’ve been able to purchase a car outright, keep those monthly savings going. Think of it as your car payment, but THIS payment is to you, NOT to some bank? Then, the next time you want or need a new car, you’ll be able to pay cash for that one as well. And, you’ll be the one earning the interest and not paying interest to some bank.   

6. The only credit/loan/liability you should incur is for a home.   I have shown, or at least suggested, above a few methods to avoid credit card and automobile debt. You will be miles ahead of everyone else in your peer set, if you can follow these plans.   

The only debt that you should carry is a home mortgage. First, because a home is the most important investment that you’ll ever make. And second, it is the only debt that carries a tax advantage.     

7. Don’t give (throw) your money away. Parking and traffic tickets, bank fees, etc. are a waste of your money.   Give a good look at where you are spending your money.  Some of your ‘expenses’ are truly without value. Thing about parking and traffic tickets. Is it really worth it to park that close, go that fast? You’ll get there. And, if you park a little further away, the walk will do you good.   

My personal hot button is bank fees! And, fees on credit cards. Shop around. Look around. You can find banks with little or no fees, especially if you’re willing and able to maintain some minimum balance.   

The other thing that banks like to do is charge ATM fees. Most banks will tell you which ATM’s they offer for free and you can get cash for free when you use your debit card when shopping. Most establishments that accept debit cards offer the option for ‘cash back’. And, there is no  fee for this service.