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  • Writer's pictureOwen

Four Quick Steps to Take Control of your Finances

It can be easy to become overwhelmed when thinking about building your overall wealth. You are bombarded almost every day by self-help gurus who describe a lot of different ideas on how to handle your personal finances. Ultimately, it is up to you to make the right decisions to grow your wealth so here are 4 simple steps that you can take now to do just that.

1.  Do a spending cleanse.

This first step is simple: cut out excess costs. We all have specific things that we like to indulge in. For some of us, it’s a weekly trip to the beauty parlor. For others, it’s going out to eat at an expensive restaurant.  Whatever your preferences are, try to find something non-essential in your life and eliminate it for a short period of time.  You may find that you can actually live without it. There is nothing wrong with having an occasional luxury in life, but cutting out the excess can result in huge savings and greater wealth.

2.  Save as much as you can, and do it often.

For even the most financial savvy among us, it can be difficult to save money. There is always the temptation to buy the newest iPhone, get a new car,or taking that vacation trip. Buying dominates our thinking, but we also need to think about how to save. 

We recommend taking at least 10 to 15 percent of your annual salary and putting it aside to invest.  For those who are over 40 and perhaps need to catch up, raising that percentage to around 25 percent of your annual income may be the goal. This step is made easier if you work at a company that allows you to move an automatic percentage of your salary into your 401(k). If you don’t have an option to save automatically, establish a set percentage of your salary to save and stick to it.

3.  Lower your financial stress.

Debt causes a lot of stress, so the most obvious thing to do is to get rid of it.  If you are struggling with credit card debt, make a strong concentrated effort to reduce it.  You might be surprised by the freedom you feel after the burden of debt is lifted.  Another great way to reduce stress is to budget your expenses and plan your financial goals. 

Budgeting can give you peace of mind by telling you the exact state of your finances.  In addition to a budget, you should have a list of short and long-term financial goals and a plan for how to reach them.  It is especially important to create intermediate steps to reach these goals. 

One famous Chinese proverb says “It is better to take many small steps in the right direction than to make a great leap forward only to stumble backward.”  And this can be true towards your own financial awareness.

4.  Keep investing costs low.

When looking at mutual funds, ignore the ones that charge high commissions.  These front-loaded funds can sometimes be recommended by some financial advisors simply because they receive huge commissions for selling them to you.  This presents a conflict of interest since these planners will focus on these loaded funds instead of working holistically on your overall portfolio.  These advisors may be more focused on their own interest, and if that’s the case your money may be simply moving out of your own pocket to theirs.  Management fee-based advisory stands out as a much cheaper and more effective alternative to outrageous commissions. 

Fee-based advisors can assist you with all of your financial needs and grow your portfolio without the hassle of commissions.  Since these advisors are only paid a single management fee, they consider the best overall plan for your portfolio. By following these easy steps, you can grow your wealth and reduce the stress that can come with financial matters.  Spend a few minutes with your spouse and discuss how you can implement these steps. 

Now, relax and enjoy summer vacation because you are well on your way to increasing your wealth.

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