Everyone makes a few monetary mistakes now and then, but according to financial guru Suze Orman, it's vital to let go of the past when trying to asses your future. “We are free to move forward only when we remove the emotional shackles of regret,” she explained. “This cleansing step is especially important for couples. You are in this together, so no finger pointing or arguing about any past decisions.”
Once money matters are out in the open, getting your financial house in order means taking stock of what’s happening with a “before” shot of finances. “I want you to open every single financial statement — bank, credit card, mortgage, 401(k), brokerage account — and take a look,” Orman said. “Only when you have everything in front of you can you set priorities about what to do next.”
Grow your wealth with these expert tips.
Get An Education
Take time to study personal finance to make the most of your money and minimize potential downfalls since, as billionaire investor Warren Buffett noted, “risk comes from not knowing what you’re doing.” That doesn’t have to mean going back to school and getting an expensive degree in finance. Rather, educating yourself can be as simple as reading as much as possible about investing and other areas of wealth-building. “That’s how knowledge builds up, like compound interest,” Buffett pointed out.
Check Your Credit Report
One of the best ways to gauge financial health is to run a free yearly credit report. Not only can this step help uncover problem areas or identity theft, but working toward a higher score through fiscal responsibility saves money in the long run. “A credit score is highly influential in almost all financial transactions,” Julie Pukas, head of Merchant Solutions at TD Bank, revealed.
And according to Katie Ross, education and development manager for American Consumer Credit Counseling, “If you mismanage your credit and earn a poor credit score, you’ll be less likely to qualify for loans or credit. Or you’ll end up with a loan with a high interest rate and poor terms and conditions.”
Avoid repeating your mistakes by getting to the root of how you got yourself in hot financial water. “I think that figuring out why you got into debt is an important part of working on your debt strategy,” Beverly Harzog, author of The Debt Escape Plan, said. “You need to take a look at why this happened in the first place. If you don’t, it’s likely to happen again. Something like impulse purchasing, those shopaholic tendencies — they can really kill your budget.” And while Harzog noted that most issues take time to resolve, “If you know what the problem is, you can at least start working on it.”
Show Some Appreciation
Increasing bank balances is the goal of most people who work, but it’s vital to take stock and be grateful for the money that’s coming in right now — especially when it’s not a lot. “If you don’t appreciate what you have now, you’ll never appreciate what you get later,” expressed entrepreneur and author Tim Ferriss.
Avoid Lifestyle Creep
Salary bumps are often viewed as an excuse to spend more on anything from a better place to live or a fancier car to stocking your closet with more expensive clothes or splurging on a luxurious vacation. Despite the obvious temptation to indulge, Chad Rixse, cofounder of the financial planning company Millennial Wealth, advises clients to be more mindful with how to allocate newfound funds.
“Far too often, we fall victim to ‘lifestyle creep,’ where we raise our standard of living to match our income, when what we should be doing is raising our standard of saving to match our income,” he explained. “When you get a raise, pay yourself first!”
Make Saving Mindless
Looking for an easy and painless way to sock away some cash? "Save every $5 bill you come across and put it in an envelope. After a year, you’ll be surprised by how much you’ve saved," insisted Paris Chevalier, chief experience officer at USE Credit Union. Use a little to splurge on something fun and the rest to pay down outstanding debt.
Put Money To Work
It’s smart to put money away for emergencies, but it’s all about balance. “One of the best pieces of advice I got about money is to not work for money — instead, let money work for you,” shared Todd Kunsman, a marketing and growth professional with Invested Wallet. “Too many times, people get stuck in the cycle of just banking their money in a savings account.”
Instead, diversify as much as possible with brokerage accounts, retirement investments, real estate, stocks and other opportunities. “You want your money making you more money while you sleep,” he added.
While it’s often a lot cheaper to self-prepare and file taxes, spending a little more to hire a tax professional can reduce tax burdens and save money overall, especially if you have a complicated financial situation or you’re just not certain what can and cannot be deducted. “You want to be sure you are taking advantage of all possible tax breaks, that you’re minimizing tax liability and that you’re doing everything possible to plan for future tax years and situations,” claimed Jackie Perlman, principal tax research analyst of H&R Block’s Tax Institute.
The best advice for retiring rich is to start saving or investing somewhere right now — even if you’re further along in life and concerned it may already be too late. “Nothing eases worry like taking action,” Russell Kizer, a financial adviser with RCM Capital Management, said. “Block out all the fears and negative news reports on TV that tell us the sky is falling. Commit to investing each month, no matter what’s going on in the stock market.”