Financial freedom is probably the best thing we can all have in life. Being financially stable allows us to live in a good house, take our kids to the best schools, afford good healthcare, travel to our best destinations, and drive the best cars. Unfortunately, most Americans are not living the best life. True, the unemployment rate is at a 50-year low and wages are slowly rising. However, we are still highly indebted and the cost of living is growing at a faster rate than our wages. In this article, we will list four key strategies to secure your financial future.
Secure Your Financial Future: A Strong Foundation
The first step to setting yourself up for a bright financial future is to have a strong foundation. This is what most of the richest people in the world have done. There are several ways to do this but the most important is to invest in a good education. Nothing beats that. Studies show that most Americans with a college degree will earn more than $2.1 million in their lifetime. This is much more than what people with no degree will earn.
If a college degree is not for you, we recommend that you take some technical courses. If you are into technology, you can take short technical courses using online platforms like Udemy, Udacity, Khan Academy, and EDX among others. Alternatively, you can take technical courses like machine operations from local academies.
Education should come with experience. As such, you should strive to work as soon as possible. If you are a teenager, we recommend that you find a simple job that will give you some experience. You can work at a McDonalds or in a local grocery store. The experience you gain in this environment will be so important to you.
Another way to create your foundation is to start investing and saving as soon as possible. In this, we recommend that you start a small savings or investment account. The earlier you start the better it will be for you. You can start by saving as little as $20 per month. In the long run, this amount will be bigger than you expect.
Next, you should try your path to entrepreneurship. I agree. We are not all created to be entrepreneurs. Still, the only way to know whether you are created to be an entrepreneur is to try. Therefore, we recommend that you start a small by starting a small business and seeing how it works. If it fails, you can always find a job.
Secure Your Financial Future: Identify Your Financial Goals
The next step to secure your financial future is to identify your financial goals. Basically, you should ask yourself about what you want to achieve in future. After identifying the goals, you should strive to prioritize them. The Federal Bank of Dallas identifies four key strategies to achieve this goal:
Most people who have built wealth didn’t do so overnight. They got wealthy by setting goals and pushing themselves to reach them.
- Be realistic. You should set up financial goals that are realistic. This is a key mistake that many people do. They set goals that simply unachievable. For example, it is impossible for you to retire with a million dollars if you are saving just $20 every month.
- Establish timelines. A goal without a timeframe is merely a dream. As such, we recommend that you have a set timeline of when you want to achieve your goal. For example, if you are 20 years and want to own a house by the time you are 25, you need to calculate the amount of money you need to start saving and then do it. You should set quarterly personal meetings to track your progress.
- Establish a plan. A goal without a plan cannot be achieved. A good plan to grow your wealth is to work more hours in your early age. This will help you to accumulate your wealth and live a great life by the time you retire.
- Be flexible. The need for conducting regular personal meetings is to revisit your plans and see whether they are working. As such, you should be flexible to change your plans as circumstances change.
Secure Your Financial Future: Start Saving and Investing as Early as Possible
The success of your financial future depends on when you begin saving and the amount of money you start saving and investing. The best way to achieve this is to designate part of your income to long-term savings. Also, we recommend that you start saving and investing as early as possible. To achieve this, we recommend the following:
- Have [side gigs](/us/side-gig and invest this money: If you have a steady job, you can have a side hustle and then use the proceeds you make to save and invest. We know many people who have created a great nest-egg by using this strategy.
- 401k and IRA: You should add money to your retirement account and 401k. This will ensure that you have more money when you retire.
- Invest in index funds: If you are not an experienced investor, we recommend that you invest in index funds. Our experience shows that these funds are the best ways to maximize your wealth.
- Invest in peer to peer lending: Another way to grow your wealth is to invest in peer to peer lending platforms like Lending Club and Prosper. You should only invest a small portion of your funds in these platforms.
- Invest in low-cost ETFs: ETFs are excellent methods to diversify your income. They are usually safer than stocks.
- Invest in crypto: Yes. We actually do recommend that you put a small amount of money in Bitcoin. This is an excellent way to speculate about the future of money.
Secure Your Financial Future: Protect Your Wealth
Finally, after doing all that, we recommend that you do the best to protect your wealth. You do this by doing several things. First, you protect the source of your income. If you are an employee, you can protect your wealth by being the best employee to your firm. Also, you can move to a better-paying job.
Second, you protect your wealth by vetting the places you invest your money. If you are giving money managers to invest your money, take your time to do research about them. You don’t want to invest your money to the next Bernie Maddoff.
Third, always track your wealth. You do this by taking monthly statements and seeing how they are doing. At the same time, you should avoid making premature withdrawals and ensuring that the money managers charge a reasonable fee.
Finally, avoid taking big loans against your future investments. This will be the start of your downfall.
Crispus is a finance professional with more than a decade experience in the industry. Over the years, Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, and Seeking Alpha. He also runs a Forex education and managed account company called WestEndFx.