Entries Tagged 'retirement' ↓
August 14th, 2008 — Budget, Financial Security, Goal, Long Term, Money, Personal Finance, retirement
We would love to start a great new experiment, where everyone would catalog all of their impulse purchases for the course of one year. Everything from that cheap pack of gum to the “whatsit” that we really don’t need would have to be recorded. At the end of the year, everything would be totaled up to see just how quickly we are all nickel and diming ourselves to the poorhouse. The old saying is true, “The rich are rich because they don’t spend any money.”
So, how can you put this to work in your life, without being excessively frugal? Chances are, you probably buy more than you realize and a lot of it is probably unnecessary. Impulse buys are the bread and butter of many industries and there is a reason that those little items are so easy to buy. It’s so easy to fall into that trap of “well it only costs a quarter,” without realizing that we are easily spending way too many quarters every month.
If you’re finding that you are always out of money at the end of the month, or you just can’t seem to get ahead, it is definitely time to break free of that cycle. It’s time to develop a “needer” instead of a “wanter.” We live in a society where instant gratification is king and many of us have “wanters” that are out of control. It’s simply just so easy to focus on what we want instead of what we really need.
The first step towards putting a leash on your wanter is to take a hard look at everything you buy. Ask yourself whether or not you want to work at McDonalds at the age of 78. This is probably the easiest way to gain perspective on what you purchase.
When you look at everything as the tipping point between spending the rest of your life in ease, or working in a burger joint, it casts a harsh light on your spending habits. Yes, it’s a little extreme, but if you do end up nickel and diming yourself to poverty, it will be too late to do anything about it. Sometimes, you need to get extreme in order to train yourself into better spending habits.
Instead of going a whole year, do the experiment for just one month and see how much you really spend on frivolities. Now, next month, take that exact same amount and put it to work for you instead of against you. Leverage that towards creating a second income or put it in a savings account. Chances are, you’ll surprise yourself at how much money you can make in the place of that pack of gum. Your future is in your hands and it is up to you as to where you will spend your retirement. It is never too early to start making the right choices that could affect your financial future and the rest of your life.
Photo Credits: 1
Related Articles
Related Stores
August 6th, 2008 — Diversification, Financial Security, Income Streams, Investing, Long Term, Money, Personal Finance, Standard of Living, passive income, retirement
One of the hottest concepts right now is the premise of creating multiple streams of income. While everyone wouldn’t mind making a little extra cash, there are even more benefits that can be reaped from having more than one source of income. Let’s go over just a few of them.
1. Help save for retirement.
The average person needs to have more than $500k put aside for their retirement in order to live in comfort and without worries. Unless you have a job that pays incredibly well, this is going to be a pretty daunting task. You cannot rely on social security payments to secure your future. Whether you’re 25 or 55, it is never too early or to late to put aside money for your retirement. Unless the thought of working until you drop dead appeals to you, you’re going to have to find ways to supplement your current income.
Multiple income streams can be incredibly beneficial not only for retirement planning, but later in life. Smart investments will continue to reap rewards for many years to come and you’ll have that nice supplemental income that will make your life easier far past the retirement age. A good concept to try to is put all of your multiple income streams into a high interest account to make even more money for your future.
2. Layoffs and downsizings happen every day.
No matter how secure you think your job is, there are still chances that you could get laid off. There are very few guaranteed jobs in this world that provide lifelong security. If you are relying solely on the income for your job to pay your bills and make ends meet, you are literally one paycheck away from financial ruin.
It’s a stark reality that all of us face. However, if you have multiple streams of income coming in, you won’t have to worry so much. You’ll have a cushion that will tide you over if you do get laid off or lose your job. In some cases, lucrative streams may even replace the need for your job entirely.
3. Accidents happen.
Even if you have insurance – what would happen if you were injured today and no longer able to work. Could you pay your bills? This happens to thousands of people every year and they risk losing their homes, bankruptcy proceedings and worse. By having that extra cushion with several different streams of income, you are reducing your reliance and making sure that no matter what happens, you’ll be ready to face it.
If you don’t have health insurance, it’s even more vital to have steady streams of income coming in each month. You may be the picture of health right now, but what if you get hit by a bus on the way to work tomorrow? Unless you have thousands of dollars in savings, the answer isn’t pretty. Even if you do have a savings account do you really want to use it for that? What will happen when it runs out? The best kind of insurance you can have is a steady stream of extra income.
Photo Credits: 1
Related Articles
July 28th, 2008 — Budget, Cash Flow, Debt, Financial Security, Income Streams, Long Term, Money, Personal Finance, retirement
Whether we realize it or not, many of us face financial risks every single day. From the high powered investor, to the minimum wage earner, every one of us has the potential to lose everything we own. How can you evaluate your financial risks and find ways to secure your future? Let’s take a look!
First, it is important to figure out exactly how much you spend in a single month. Get a notebook and write down everything you spend over the space of one month. Include everything from the smallest item to the largest, and don’t forget to include your monthly bills as well. At the end of the month, total up everything you spent and compare it to how much you make.
If you are overspending or cutting it close, you are definitely at risk for financial ruin. If you have more than enough left over at the end of the month, your risks are quite a bit less, but they may still be there. One of the best ways to tell how close you are to the brink is to experience what it is like when your paycheck is a few days late. Do you panic? Do your bill collectors panic? If the answer is yes, you may be cutting things a little too close.
Not many of us realize how much we depend on our paychecks every month. We may think we’re doing ok, and we have plenty of stuff to make us comfortable. Few of us put aside anything and before we know it, we’re living paycheck to paycheck. Add in credit cards and you’ve got a recipe for disaster.
Now, let’s look at the other end of the spectrum. Let’s say you’re financially well off, you’ve got plenty of investments bringing in some pretty decent returns. You’ve come to rely on those returns and you’ve always got the back up of your 401k, right? Now, let’s say the market takes a nosedive, ala Black Monday or the dot com fallout. How well off would you be then?
No matter if you make $800 a month or $8000, diversity and multiple streams of income are the best answer to shoring up your defenses against financial ruin. Let’s face it, most of us would not turn down more income every month, especially if we didn’t have to work hard to get it.
By reducing your reliance on your paycheck, or your standard investments, you are increasing your chances of being able to withstand a finance shattering event, such as a market crash or the loss of a job. The more ways you have to make money, the less likely you are to fall into financial ruin.
One of the secrets that millionaires have is leveraging debt to create a new stream of income. For example, let’s say you take out a loan to use to buy an investment property that you rent out. This is now an income producing property and you’ve got more money coming in. As you pay off that loan, the profits keep rolling in, and you’re less reliant on your standard means of income. That is one powerful way to avoid financial ruin.
Photo Credits: 1
Related Articles
Related Stores
July 14th, 2008 — Diversification, Financial Security, Goal, Income Streams, Personal Finance, retirement
Most of us think about retirement and panic. It can be tough trying to figure out how we’re going to survive and plan for our futures when we’re just trying to make ends meet right now. If you’re strapped for cash at the end of every month, chances are you are not saving anything for retirement or for that rainy day. Although many of us have 401k’s, we cannot rely on these for our sole source of retirement money.
It’s easy to think that your 401k will always be safe, but this is not always the case. Companies go under, investments go bad. Never rely on this, or your Social Security benefit as the sole source of your future income. The key to planning and financing your future is creating multiple streams of income right now.
80% of Americans are living paycheck to paycheck right now. That means that millions of us are facing homelessness if we lose our jobs. This is a startling figure and it really drives home how important it is to have more than one stream of income coming in every month. If you are relying on your paycheck right now and it barely meets your needs, think about what would happen if that paycheck disappeared? How would you pay your bills?
Setting up multiple streams of income can be a bit daunting, especially if you have no capital right now to invest. There are many different ways that you can create multiple streams of income, even if you don’t have much money. First, let’s look at creating active streams of income, then we’ll move onto passive. Active income is something that pays you money for work that you do. This can mean getting a second job for a few hours every week, or channeling your talents into extra work.
For example, if you’re handy at fixing cars, consider setting up your own little shop in your garage. Only take on as much work as you have time for, and you’ll be bringing in extra money every month. If you’re good at something, and most of you are, there is a way to leverage that into more income.
Now, let’s look at passive income, or income that comes in requiring no extra work on your part. This is the best kind of income and it’s important to have at least one passive stream. Passive income includes returns from investments, or dividends that come in. If you don’t have any money right now, consider getting a small loan to invest in a proven stock or to put into a high interest bearing account. This is called leveraging debt and it is a concept used by millionaires across the world.
You can also get passive income from rental properties or from buying homes and selling them at a higher cost. Talk with a financial planner about your passive income options and take that step towards achieving your financial freedom. You don’t have to rely on one paycheck!
Photo Credits: 1
Related Articles
Related Stores
June 4th, 2008 — Financial Security, Money, Personal Finance, Standard of Living, Wealth, retirement
As millions of aging baby boomers start contemplating how they are going to survive when they’re no longer working, retirement planning has hit an all time high. Whether you’re just starting out in the workforce, or you’re staring 62 in the face and wondering where the money is going to come from, it is never too late to start planning for your retirement.
There are many ways that you can start putting money aside to help you in your later years. First, you’re going to need to figure out how much money you need every single year to survive. Take 10% of that and add it on for emergencies. You’ll need to extrapolate a bit when it comes to how long you plan to live, but most people shoot for at least 30 years of retirement money. So, take that amount per year and multiply it by 30. This is the amount that you’re going to have to put away.
Pretty frightening isn’t it? Now, take that figure and divide it by how many years you plan to continue working. This will give you an idea of how much money you need to start putting aside every year. Subtract any savings or 401K plans that you have and you’ll have the bottom line. As an example, to illustrate this process, let’s say that you need at least $45k a year to pay all of your bills and live comfortably. You’re currently 35 years old and you plan to work until you are 65. This means you’ve got 30 years to save money.
To be on the safe side, we’re going to put away enough to last 30 years. Even if you don’t live that long, you’ll have plenty put aside for managed care or other health expenses that can crop up. In total, you’re going to need to put aside $1,350,000. Add in that 10% cushion and you’re at just under $1.5 million. Ouch! You’ve got thirty more years to save, so you’re going to have to put aside $50,000 every single year to meet your goal.
(Editor’s note added after publication: As pointed out in a comment below, I left out the power of compounding interest… but I also left out taxes and inflation… If you think you could live on 45k a year now you will need to adjust for inflation as well… Personally I think I will have a hard time living on only 45K per year. I don’t think I was misleading, but perhaps I was oversimplifying.)
Unless you make an incredible amount of money, chances are you’re not going to be able to put aside this much money. Even the best 401K’s rarely perform that well. So, in order to make sure that a soup kitchen isn’t in your future, you’re going to need to look into some investments and alternative streams of income. If you don’t have a lot of free income as it is, debt leveraging may be in order.
If you’re not familiar with this term, it basically means going into debt in order to take advantage of opportunities that will create new streams of income. When managed wisely, this is a very easy way to put aside more money. The key is finding the best opportunities or stocks and being cautious at first. With proper management, debt leveraging is in an incredibly powerful tool that can be used to secure your future.
Photo Credits: 1
Related Articles
Related Stores
