Sat Feb 11 2012
A visit to your favorite bookstore, or book section of other stores, will reveal dozens of books on strategies to achieve financial goals. Here are some strategies to help attain financial success when put into action.
>Establish specific goals. Assign a price, purpose and achievement date for each financial goal, such as “save at least $1,200 a year for daughter’s college tuition to begin in 2021.” It might not seem so overwhelming if you break the savings strategy into smaller increments, such as “save a minimum of $100 a month.”
>Make success a focal point. The adage, “where there’s a will, there’s a way,” is as applicable to achieving your personal finance goals as it is to other important areas of your life. It takes discipline and determination to save today for a goal that’s many months, or even years, away. This is one reason it’s important to establish specific goals that give you an incentive to save and something for which to strive.
>Live below your means. This is an intentional process to spend less than you earn and save the remaining money. You can find money to save to attain future financial goals by selling assets, such as having a yard sale, increasing your income by finding a part-time job; reducing expenses by taking your lunch to work or having a family fun night rather than going to the movie, or doing a little of each of these.
>Make saving an automatic habit. One of the best ways to routinely save money is to do it automatically. You can have money routinely deducted from your paycheck into an employer 401 (k) or 403 (b) plan. Another method is to have your bank, credit union or other financial institution routinely deduct money from a checking account and put it in a savings account.
>Carefully borrow. To meet your financial goals, keep debt low and pay the least possible for borrowing money. Families often have financial problems when monthly debt payments exceed 15 to 20 percent of the net (after-tax) income. Additionally, money you spend to repay debts isn’t available to invest.
Even people who aren’t having difficulty paying bills might be paying too much for credit. Strategies to lower credit expenses include negotiating lower interest rates from creditors, transferring outstanding balances to credit cards that have lower interest rates, and applying the payments for re-paid debts as extra payments to remaining debts.
>Take full advantage of tax breaks. You have several ways to reduce your tax bill including contributions to tax-deferred employer retirement plans and buying tax-free municipal bonds when appropriate for your age, your risk tolerance or tax bracket. Other common tax-reduction strategies include the child, dependent care and earned income tax credits and itemized deductions for state and local taxes, business expenses and charitable contributions.
>Develop financial resilience. Sometimes bad things just happen. We need to develop the ability to bounce back when bad things happen such as illness, unemployment and divorce. Many circumstances can contribute to financial resilience including ample savings, low household debt, current employment skills, a social support system and community resources.
For more information on personal finance, contact the Franklin Co. Cooperative Extension Office, 695-9035.
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