Achieving your long-term financial goals is a lifelong commitment. It requires careful planning and daily decision-making in a manner that is consistent with the financial targets you have established. Consider implementing these Five Financial Strategies to Last a Lifetime to grow your personal balance sheet and ensure your financial security.
Strategy #1 – Have an Emergency Fund
Let’s face it – life happens – whether it’s a large, unexpected medical bill, a temporary job loss, or your air conditioner suddenly quits in the middle of a hot summer day. To cope with these situations, have three to six months of living expenses in cash set aside in a separate account rather than maxing out your credit cards. I park my Emergency Fund in an online savings account that offers better rates of interest and that is linked to my primary checking account for easy access to the funds.
Strategy #2 – Spend Less than you Make
It’s a simple financial strategy to understand, but difficult for many of us to implement. Over 40% of US households routinely carry high interest credit card debt. Early in our marriage, my wife and I made a commitment to one another to discuss all major purchases and to never carry credit card debt. If you currently have credit card debt, make the commitment to yourself and your spouse or partner to pay it off in the next 6-24 months and instead save the money toward your long-term financial goals.
Strategy #3 – Protect Yourself & Your Family
Once you begin accumulating wealth, you need to make sure you have the right kinds of insurance protection. Say “yes” to the kinds of insurance that protects you against big losses for a relatively low cost. I protect my wealth and my family with inexpensive term life insurance (through when my kids turn 18), disability insurance and comprehensive personal liability insurance. Conversely, I always say “no” to things like expensive whole life insurance policies and extended warranties on major purchases. I’ll take my chances on a large car repair bill, but protect against the losses that could ruin the long term financial health of my family.
Strategy #4 – Let go of Unproductive “Money Scripts”
Pay attention to how you talk to yourself about money. Many people literally push wealth away by establishing unproductive “money rules” for themselves such as, “I’ll never be wealthy, money just doesn’t run in our family,” or “I’ll always be stuck in this low-paying, dead end job.” Wealthy people have much more productive internal conversations with themselves about money, which in turn translate into the actions that are required to build wealth. For the next 30 days, note the internal money rules you’ve set for yourself. Make sure they are consistent with acquiring the wealth you desire.
Strategy #5 – Increase your Learning to Increase your Earnings
Gone are the days that you can get a job out of high school or college and expect to stay with the same employer for your entire career. Many professions have been either partially or completely obsoleted with computer and automation technology. I have been continuously “in school” to acquire new or sharpen existing skills for most of the last two decades and have seen this learning directly translate to higher earnings first within my corporate career and now within my businesses. Make a lifelong commitment to learning to ensure you have the skills that employers want or the ability to go it alone with the launch of your own business.