What Does “Financial Success” Mean and How Do We Get There?
Many times over the years, people have asked me, “How can I be more financially successful?”
Each of us has a different understanding of what financial success is. When I was younger, I believed that simply being older allowed for a comfortable bank account, but now I know that having a plan for your money is essential to financial well-being. It’s not just a matter of earning more as you age and trading your youth for this level of stability.
While it may be true that having a higher salary as we age may allow us to put more money toward savings and ultimately reach our financial goals, everyone—including young people—can take steps toward being financially successful. We don’t have to be deep into our careers to get there.
5 Strategies for Financial Success Now
- Creating a spending plan helps establish the path toward financial success by putting more thought into how money is spent. Setting up a spending plan can be an eye-opening experience and may help discern financial wants from financial needs. Sometimes we spend what we see in our wallet or what we know is in our checking account, while forgetting about our periodic savings plan, but having a plan will help us stay in control of our money and track where our dollars are being spent.
- Paying down and paying off debts entirely are huge steps toward financial well-being. Although credit cards are a great tool for helping with unexpected expenses or larger purchases that can be paid off over time, using them for daily spending can be an obstacle to financial independence. Therefore, it’s important to have and use a low-interest rate credit card when we have to carry a balance on one. Sometimes using the equity in our homes or using a consolidation loan will help pay down debts sooner to further financial goals.
- Regularly contributing to a 401K retirement plan or investment account is a great way to strengthen financial security. This is especially beneficial when employers will match up to a set percentage of contributions. The old saying “Don’t leave money on the table” applies here, and it is wise to take full advantage of any matching programs that employers offer. For those who do not have this option, regularly investing in retirement is equally important. It might seem far away, but financial success is not a short-term undertaking.
- Having a savings plan for emergencies and periodic expenses can also be a valuable financial tool. Recognizing the practice of “paying yourself first” can get us in the habit of setting something aside and start the pattern of saving. Once we are in the habit of setting aside money before paying our monthly expenses, we will have a better understanding of what we have to spend to meet our financial obligations. Consider having money automatically deducted from paychecks and deposited into a separate savings account to build savings reserves. In time, the shifted savings won’t even be missed on payday.
- Maximizing employment benefits, like a flexible spending account, health savings plan, or reduced life insurance plan is a way of investing in ourselves—both now and in the future. These options can be very rewarding and offer even more security if they can transfer in the case of a change in employment.
As you can see, being “financially successful” isn’t a one-size-fits-all proposition. This is one of the reasons Call Federal Credit Union has developed our Money & Beyond Financial Education Program and offers certified credit counselors to be your partner in setting your path to financial success.
Questions about your specific spending and savings habits? Get in touch with Call Federal today. Helping you attain financial security is our favorite thing to do.