How To Maintain Your Money
Why do some people achieve long-lasting financial success while others struggle with money for their entire lives
? After years of seeking the answer to this mystery, I have discovered that the route to prosperity lies in the knowledge and application of some basic principles that govern money.
Here are the four essential steps to maintaining your money:
Protect Your Money from Risks
Risk is the uncertainty of an event occurring that could have a negative impact on the achievement of your financial objectives. In order to preserve the money you have made, you need to plan strategies to mitigate against these harmful occurrences.
Investing risk is the possibility that the returns on your investment may be less than expected. The reality is that a great investing opportunity is like a double edged sword it can bring massive gain or cause you to lose big. To protect yourself against investing risks, consider:
-The consequences: what would happen to you if the negative event occurred?
-The probability: how likely is it that the negative event will occur?
-Your objectives: how will the investing risks affect your goals?
Its best to seek professional advice to help you decide if the returns are worth the risks.
Personal risk is the possibility that you wont be able to carry on with your investment plans. These risks include the loss of your ability to earn and early death. Building up an emergency fund with three to six months living expenses is your first defense against personal risk. It is also crucial to get life and health insurance to protect you and your family.
Plan for Retirement
When you are young, strong and seemingly invincible, its very hard for you to think about the time when you dont want to, or cant work for money any more. Sadly, I have seen that a major reason for loss of wealth is that people retire and outlive the money that they have acquired.
It is vital to start planning early for your retirement. Get help from an advisor to calculate how much money you will need to last throughout retirement. Then make a plan to save consistently by using salary deductions, and try to contribute the maximum to your pension plan. With time on your side, you can create a comfortable nest egg.
However, even if you have delayed planning for this life change, dont give up hope. Doing a retirement spending projection will let you know the extent of your shortfall. This will allow you to make appropriate plans to continue earning in your golden years to make ends meet. Check out the retirement needs calculator in the financial tools section at www.financiallysmartonline.com.
Plan for Your Passing
It is financially smart to make plans while you are alive, to transfer your money and assets when you die. Estate planning is not only for the wealthy, but for everyone with dependents or any type or property.
If you dont plan for your passing, your survivors may find it hard to get money to pay funeral expenses, your outstanding bills, and estate taxes and fees on your property. Smart preparation for your inevitable demise can also help to preserve your wealth from excessive charges.
You can reduce the hassle and time it can take to pass on your property by writing a will, using joint accounts at the bank, buying property as joint tenants, and taking out life insurance with a named beneficiary. Make sure that you think carefully about who you want to carry out your wishes, and get proper advice from insurance, legal and financial experts.
Achieve True Freedom
There is more to financial success than just the accumulation of wealth; your mentality about money is also important. Isnt it sad to see people who may have significant monetary assets but are fearful, stingy, and generally not enjoying their good fortune? Whats the point of having money if it doesnt enrich your life and that of others?
To truly achieve financial freedom you must be aware that money is abundant; there is no shortage of wealth. However, if you hold on tightly to your money, you actually believe that money is scarce. Scarcity thinking will only keep you poor in mind and spirit, so try to increase abundance in your life by giving time and money to worthy causes.
Finally, never allow affluence to change your attitude or bloat your ego as you accumulate wealth. Remember that people are always more important than money!
See also:
The 3 Ms of Money
How to Manage Your Money
How to Multiply Your Money
2009 Cherryl Hanson Simpson
by: Cherryl Hanson-Simpson
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