5 Pillars of Financial Stability

Before you can run you must learn how to walk. Once you establish your foundation as a solid walker you can then pursue your dream of running. This simple analogy can also be applied to achieving your life goals. If your dream is to own a 60-foot yacht or a Ferrari Spider you will first need to accomplish some basic prerequisites. If you choose to ignore the initial steps to achieving your dreams you will likely end up falling short as you reach for the sky and end up with a handful of nothing. If you can understand these five basic principles of financial knowledge and apply them to your life you will then be able to take further steps towards reaching your ultimate goals.

Eliminate Debt – Many Americans rely heavily upon debt to maintain their lifestyles and take on new ventures. Whether your debt consists of credit card balances from shopping, student loans from college or car notes from buying automobiles, you must eliminate all outstanding debts in order to be financially sound. The only acceptable debt is the mortgage on the home that you live in. If you can discipline yourself to pay your debts before you make new purchases you will take control of your finances.

Own Your Home – Despite the “crash” in many housing markets throughout the US, it is still a wise investment to own the home that you are living in. Owning your home gives you protection from rent increases and inflation, while allowing you to retain total control over your domain. As long as you own your home you can paint it however you desire, enjoy the company of pets if you choose to, and stay for as long as you like. Being a homeowner also locks in a fixed monthly mortgage payment, and if you choose a payment that you can afford you will be securing a large aspect of your fiscal budget.

Save For Retirement – Although it offers no instant gratification whatsoever, saving money towards your retirement is one of the smartest things you can do financially. The power of time and compound interest offer a unique opportunity to accumulate wealth over your working years that can be used to fuel a long and enjoyable retirement. If you under-estimate the importance of retirement savings you will most likely live to regret that decision. If you delay saving for retirement you will fall behind and lose precious years of missed opportunity. Start by saving a small amount each month in an interest bearing retirement account and see how quickly your portfolio grows.

Keep Regular Savings – Life will always present new challenges and unforeseen changes. If you are not prepared for the unknown by having money saved, you will fall victim to incurring debt to stay afloat. No matter how stable your job is today or how confident you feel about your business, it is always best to maintain a solid amount of savings just in case.

Don’t Add Unnecessary Expenses – Refrain from signing up for multiple magazine subscriptions, two year cable TV contracts, monthly shipments of wine and other recurring bills that you don’t need. When you look back on your past decisions you should be confident that every dollar was well spent. If you can establish good habits of self-control and disciplined spending you will maintain your financial health throughout your lifetime.

Hopefully these boring yet critical pieces of financial advice will resonate with readers and help people enjoy happier healthier lives. Start taking control of your finances today and build towards a more secure future.