Such shortsightedness is tantamount to aiming a heat-seeking missile at our financial future. Instead, we need a sound financial plan: 1) create a long-term savings strategy; 2) eliminate short-term spending plans; 3) refuse to reward yourself for enduring tough times; and 4) stop deluding yourself that you can treat shopping discounts and bargains in the same manner as savings deposited in the bank. Bottom line: You can’t spend your way to building wealth.
Just as you would develop a strategic plan for career or business, apply the same practice to finances. First, develop a budget designating personal savings as a bill to be paid first. Allocate a portion of that take-home pay to store liquid cash reserves for emergencies. Second, have regular deductions taken from your paycheck for investment in a 40l (k) or 403(b). Third, track spending on a daily basis to determine items you need versus those you want. By monitoring your finances, you’ll quickly discover “additional†money for saving and investing. Next, establish a comprehensive investment strategy tied to specific goals such as a down payment for a home, financing a college education, or, most important, retirement. Regardless of your financial position, I believe it is essential that you always find a way to set aside money to invest.
Those of you who are familiar with my columns know that I have repeatedly espoused a philosophy of save, save, and save some more. I will continue to stress the importance of saving because I am convinced that knowledge and discipline married to our financial wherewithal can produce significant wealth for generations to come. To those committed to the idea of saving and investing, I would encourage you to visit BlackEnterprise.com to download our Wealth Building Guide. This will provide you with all the necessary tools to curb the desire to engage in rampant spending and debt accumulation. We will put you on the right course to secure your family’s future.