My financial planning career has taught me that most people make financial planning harder than it has to be. Here are three proven ways to build wealth: *401(k). A 401(k) retirement plan is a great start to planning your financial future. You are able to save your pretax income dollars and in turn earn more interest. Many employers contribute to your 401(k) an equal or almost equal amount to what you deposit. This is gifted money that you want to take full advantage of. Talk to your employer right away about how to get your 401(k) started. *Don't be easily influenced by the latest and greatest in investing. There are so many "get rich quick" schemes out there that can cause you to loose a lot of money. Research every investment carefully to be sure it is secure. Education yourself so that you do not have to depend on others to always guide your investment decisions. If you are knowledgeable you will be able to analyze and investment opportunity to determine if it is a wise step. *Get rid of your high interest credit. If you have credit cards that carry high interest rates stop using them and pay off the balances as quickly as possible. Direct more of your income to high interest debt until you are able to eliminate it and pay only the required amount to low interest debts such as student loans. Your overall life goals must be heavily considered when developing your financial plan so that you can live be content and fulfilled in your life. There are many people who at one point lost their focus but were able to get back on track and are now enjoying a life of retirement and financial stability. They are content in their life because of good financial planning. Many retired Americans are enjoying their retirement years by doing volunteer work and giving back to the community and they are stress free and financially secure.
Should you apply for that credit card? What type of car insurance should you buy? Should we save for our child's college or put money in our IRA's instead? These and many more questions are all part of financial planning.
The Larry Rule - A Little Known Financial Planning Fact
Larry Lindsey is not a famous name, even in financial circles. Currently, Mr. Lindsey is the chief economic advisor to the Bush Administration. In 1996, he was a Federal Reserve Board Governor - and he was denied for a Toys 'R Us credit card!
To apply or not to apply, that is the planning question. Larry Lindsey, who had excellent credit and a high-income level, set out to demonstrate a flaw in credit scoring algorithms.
He simply applied for every retail store credit card he was offered, and in no time he had "too many inquiries." Never mind the fact that he had millions in assets and nary a late payment in his 30-year credit history.
Knowing the Larry Rule is key to your financial planning. If you apply for retail store credit cards every time you are asked to do so, it will have negative effects on your credit.
You may then be asked to pay a higher interest rate on your mortgage or home equity loan, which could cost you tens of thousands of dollars. Sacrificing $10,000 for a 10 percent discount at Fashion Bug is not smart planning!
Auto Insurance and Financial Planning
Most people think of insurance as a legal necessity, but in reality, it is a financial product, and that's important to keep in mind. Don't ever buy insurance just because it's legally required or in order to give yourself peace of mind. Insurance must serve a financial planning purpose!
You need to have a planning strategy in mind when you purchase auto insurance. The insurance company's goal is to get you to pay more in premiums than you take out in claims - thus, they profit.
Your goal should to pay as little in premiums as possible in order to be adequately covered. You don't want to have to use your auto insurance, but at the same time, you don't want to be subsidizing the bad drivers who take out more in claims than they pay in.
In order to develop a financial planning strategy for auto insurance, it's important that you become as educated as possible on the subject. Luckily, there are dozens of great sites on the internet that provide free information on the various types of auto insurance plans, and the particular laws of your state.
Everyone has to own some form of auto insurance, and thus it should be the cornerstone of any intelligent planning strategy.
The Financial Planning Dilemma - College vs. Retirement
American parents love their children and will do almost anything to ensure they have every possible advantage. As a result, many parents save for their children's college instead of saving for their own retirement. This act of selflessness is usually not a good planning strategy.
In order to avoid this mistake, one must have a decent understanding of financial planning tax implications. Most college savings accounts are taxed on some level, whereas financial planning products for retirement purposes generally are not. What's more, saving for your child's college can prevent him or her from receiving the maximum financial aid available.
In other words, by foregoing your retirement in favor of your child's college, you are actually subsidizing the children of less responsible parents - or smarter parents who chose to save for their own retirement, in light of these facts.
College savings plans normally make financial planning sense only for parents with such high incomes that their children would not qualify for financial aid.
Both Michael Geoffrey & William Smith are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Michael Geoffrey has sinced written about articles on various topics from Finances, Debt Reduction Consolidation and Collection Agencies. Are you sick of buying financial guides that promise the world but just don't deliver on those promises? We offer objective reviews of many different products in the debt, credit and investing markets. Visit. Michael Geoffrey's top article generates over 22200 views. to your Favourites.
William Smith has sinced written about articles on various topics from Investments, Network Marketing and Baseball. William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at. William Smith's top article generates over 90500 views. to your Favourites.