Many people want to know the secret to financial success. Whether they should be saving more, protecting more, investing more or spending less — everyone wants a silver bullet to set them on the road to financial success. There is no silver bullet.
The key is to have discussions with your family and loved ones about your priorities. Whether it’s saving for a child’s college education, supporting a favorite charity, building retirement strategies or a combination of all of those and more, each financial strategy should be driven by one person — you.
Thrivent Financial recommends using these five sound and timeless principles when deciding on a financial strategy.
Spend less than you earn.
This is critical. No one can live beyond their means forever, since all bills, credit cards, mortgage, home equity loans and others debts eventually come due. Being wise with money means having the ability to be prudent with the resources you already earn.
Be wise with debt.
Debt isn’t something to be avoided at all costs. Some debt can be very healthy and a way to broaden and strengthen your future — both inside and outside your financial picture. Mortgages, student loans and car loans can all be entered into as part of a healthy financial strategy, they just need to be managed carefully and effectively.
Protect against setbacks.
Even the best of financial strategies can be derailed by a sudden accident or death if not properly protected. Life insurance, disability insurance or long-term care insurance can all work as protection against the worst, should it happen, and help ensure you and your family are taken care of and you’re not leaving others with bills or burdens.
Have a short-term and long-term plan.
College, retirement, emergency savings, a new car — all these are great goals for families and individuals to set for themselves. The key to reaching these goals is to do so in a way that maximizes current resources and helps minimize risk for an overall strategy. So when it comes to transitioning to drawing down money in retirement, the most important structure is to plan for the short-term for the near-term and ensure that it’s working in conjunction with your long-term strategy for you and your family.
Many people are looking for a silver bullet when it comes to finances. The most important part is to be true to yourself, your family and your goals. These five pillars can be a guide you, however, it’s ultimately up to you and what you want for your future.