Habit 1: Take Your Company’s Money
Your company gets the most it can out of you. Shouldn’t you get the most you can out of it too? Learn about your benefits plan. Understand it. Know what it does for you. Find out the minimum you have to contribute to get the full benefits from your job. Cheap life insurance? Take it. Matching contributions on your 401k? Take them. Health savings account? Take it. They call them benefits for a reason.
Habit 2: Cover the “What If’s”
Life happens! Every one of us is going to get sick, get hurt, get in an accident…something is going to go wrong. You can either let insurance pay for it, or you can struggle through tremendous financial hardships. You choose. My suggestion? Buy the insurance! Sure, you may pay for health, disability, and life insurance till you’re 120 and never use it…well lucky you. If you get sick, hurt, or die while you’re still in your working years, your family is going to have a very hard time enjoying life if you haven’t planned for the difficulties this world can throw at you. Insurance is cheap if you buy it right. It’s worth budgeting for these expenses, trust me. My dad died when I was 10. His lack of insurance threw us into a tailspin that made life difficult for the next twenty years.
Habit 3: Starve the Debt Monster
Now you may be one of those people so frustrated with debt that you launch an all out, Dave Ramsey style attack on your bills. I know how it feels. I did it when I was 26 and up to my eyeballs in debt. If that’s you, let me encourage you to fight hard. It’s worth it! Now if you’re not at that point yet, that’s okay too. Simply add up your debts and their monthly payments. Look at how much of your income is chewed up by debt. You probably have a habit much like the rest of America where you let the debt monster buy you what you want, and then allow him to feed off your paycheck for the rest of your life. This year, decide to starve the debt monster. Don’t put anything else on credit. If you can’t pay cash for that new gaming system or that perfect dress at the mall, don’t let the debt monster buy it for you. Let it be a reward for paying off a bill. Just chip away at your debts, paying a little extra on each one until the debt monster starves to death and you celebrate over his rotten carcass in your new clothes, paid for in cash, as you climb into your paid for car and go home to sit on your paid for furniture and enjoy your paid for electronics.
Habit 4: Pay a Bill to Yourself
This is one of the most important things I see making a difference in the lives of financially successful people, and it’s so simple. Set up an account at a different bank from the one you normally use. Set up an automatic draft from your checking account to go into this new account every month. If you have a boss who will help you, maybe you can even have it drafted from your paycheck (after tax of course). Start with a small amount, something you won’t feel too much. Increase it once you realize you don’t even notice the difference. Eventually, you’ll have so much money in that account, you’ll be wondering what to do with it.
Habit 5: Give Daily Attention to Your Bank Account
Just like you brush your teeth every day, look at your online bank statement every single day. This is the simplest thing you can do to have a better financial life. What gets watched gets improved upon. You’ll either watch the money fly away faster than you make it, get aggravated and work harder to fix it. Or you’ll see the money pile up, be proud of yourself, enjoy the fruits of your wisdom and keep doing more of it. Either way, you get to a better place with daily practice.
As always, I would love to help you set up these and other important steps in your successful financial plan. These services are offered at no cost to you. Simply go to www.johnsonassetconsulting.com and click on “Financial Check-Up”. You can email or call our office to set up your free planning session.
Dan Johnson is a Registered Financial Consultant in Amarillo, TX. His company offers independent advising in savings, investments, insurance, estates, wills, trusts, charitable gifts and financial planning. He can be reached at 806.350.7444