It’s easy to spend when times are good, but even people in the most privileged positions occasionally come upon hard times. What constitutes hard times will differ according to each individual, but there’s no reason that anyone in good health should have to struggle to make ends meet. All it takes is a bit of planning. No matter what happens, sound financial strategies can safeguard people against most of the obstacles that they will face.
The average person might not believe that there’s any reason to consult with an accountant or another kind of financial expert. While the basics of saving money are easy to comprehend, the financial system contains so many layers that it would take decades to master it without guidance. Professionals don’t come cheap, but their services are more than worth their asking price.
A goal that’s as simple as saving money might seem as simple as spending less than what’s earned. That’s part of the equation, but not all savings accounts are the same, and there are ways to save money that don’t directly relate to depositing anything at the bank. Financial experts can inform their clients of tax benefits that they may not have been aware of, and they can help their clients optimize their expenses in a way that makes saving money a much quicker process. While there are plenty of things individuals can do on their own, financial professionals are necessary to get the largest returns in the shortest time span.
Savings Should be the First Priority
No matter what kind of plan a professional will help someone piece together, there are certain principles that everyone should apply. While it may seem counterintuitive, putting a small chunk of money into savings before doing anything else is a good financial habit. That may not necessarily be true for people who have trouble paying for their basic needs each week, but those who have plenty to go around should put money aside before they have a chance to spend it on things they don’t need. Even the most disciplined spenders occasionally lose track of what’s in their checkbook, and getting savings out of the way ensures that there’s never any risk of going without.
Automation Succeeds Where Discipline Fails
As much as Americans love willpower, it’s unreliable as a consistent part of any strategy. That’s because willpower is a limited resource, and while it’s great for overcoming momentary temptations, it will inevitably fail someone who needs to use it to avoid making basic mistakes. Someone who has a steady income would be better off allotting a certain amount of each paycheck according to the biggest priorities and allowing his bank to take it from there. When it’s done properly, his bills get paid and money gets saved without him having to direct any part of the process, and whatever is left in his checking account is his to spend as he sees fit.
Invest Like Investors Do
It isn’t enough to merely save money; money should be put to work for the person who holds it. While it’s technically possible to become financially independent through savings alone, that takes a very long time, and even just one or two secure investments can quicken the process by five to ten years. Investors are different kinds of financial experts than accountants or tax consultants, but in some cases they’re actually more knowledgeable than the best people in the rest of the financial field. When someone is trying to save money, he can learn a lot from the people who are best at making it.
Frugality and Common Sense
It isn’t necessary to live in a tiny box of a house in order to build a financially secure future, but saving inevitably leads to living below one’s means. When 20 to 30 percent of someone’s income is going into savings and investments, he can rest assured that he’ll be set regardless of what happens in the world around him. He can lose his job without suffering any stress at all because he has plenty of time to find something else, and if he becomes independently wealthy while he’s still young, he can name his asking price regardless of what he wants to do. Financial independence is more than a luxury; it’s a necessity for anyone who wants to get the most out of life, and although it requires a few sacrifices along the way, it makes for the best present and future that someone could possibly experience.
Jan Greene writes for financial blogs on. to read more.