For a life led with head held high is nothing less of winning an Olympic marathon race. Just look around you and you’d see how many of your loved ones have fallen mid-way through their life’s journey.
One of the most intriguing part of our lives is - money. We have so many goals and desires to fulfill that we go overboard imagining and planning about them, without ever giving a second thought as to what our financial health can endure.
So, here’s my attempt toward solving this mystery and to help you resolve your money dilemmas right from your college till the time your retire.
Secrets to a financially-strong life
To start with, a recent survey has confirmed that 81 percent of the participants (in this case, retirees) have cited financial security as the single most important ingredients for a happy life, though some of the other associating factors are also in the loop. So, here’s a secret game-plan to manifold your household income and inch closer to a financially-independent retirement life:
- Ensure steady source of income - Nothing is as ‘in the eye’ as this: The fatter your purse is, the merrier you’d be. The day you’ve built up a sturdy, reliable nest egg, on that day you can hope to lead a comfortable pre and post retirement life. However, the value of your savings would gradually reduce over time. According to the author of ‘The 5 Money Secrets of the Happiest Retirees’, Moss, of all the 1400 people he surveyed in 46 states, he found that after a nest egg of about $550,000, people started losing their contentment toward their retirement, even though the happiest ones had the highest net worths. Basically, apart from your savings, the source of your income has an equal role to play in determining how happy you’d be in your golden days. Moreover, it has also been found that retirees spending money earned either from a rental property or in the form of a pension are happier and spend more comfortably as compared to those who get their dollars from traditional retirement accounts like the Individual Retirement Accounts (IRA) or the 401(k). so, you have to make sure you have a steady source of income by investing in some kind of fixed annuities.
- Put off rent for later use - As far as renting a residential property is concerned, then it brings in more joy when you’ve hung up your shoes rather than when you're working. Simply put, when you a own a home it is shows your financial independence, however, as time flies by, it's just the opposite. This is all the more evident in octogenarian retirees. This is because homeownership doesn't come without the baggage of its own and that is - you’d have to look after the house and keep it in good, working condition throughout, in order to get a lucrative price when you sell it. The hassles of homeownership discourages aged people to stick to their own property and so, they prefer to move into a rented place.
- Earn before you spend - This you may call as the open secret, as it has been discussed innumerous times in our lives. The fact is spending less than what you earn is considered as the holy grail in the world of personal finance. On the flip side, if you fail to abide by this rule, then you’d inevitably fail to save for your retirement. You’ll have to ensure that there’s a positive cash flow in every month and spending less than what you make will ensure just that. There’s no beating about the bush in this regard. If you continue spending beyond your monthly income, then the extra costs are mostly paid out of borrowed money. This invites negative cash flow and you start building up debt that counts in a good amount of interest and other charges as well. All these extra costs will erode your capacity to save money for future emergency use, leave alone for retirement.
- Never delay to get a budget - Your financial house rests on the foundation of budgeting. If your budget is practical and fulfills your needs within what you earn, then you could hope for a brighter financial future. Or else, the worse could befall on you sooner rather later, not to speak of bankruptcy (and that too multiple times), where you could lose some of the most valuable assets you’ve amassed over the years to pay of your bad debt.
Elaborating on the concept of budget, you need to categorize your monthly expenses and set aside a definite amount for every category, based on their increasing importance in your life. One of the foremost things to consider here is your food and medicine costs. These are some of the most basic things you cannot do without. Then there are other costs like mortgage payments, insurance premiums, utility bills, conveyance, kids education, etc. One word of advice that I would like to share with you here is that never make it a chore.
