1) 8 Tips for Financial Success
“Financial knowledge is financial power”
1. Choose Carefully
Every decision has a cost, so be sure t o
consider your options.
Too often, people make financial decisions without thinking
through the consequences. For example, a consumer feels
they must have a product, doesn’t have enough cash, and
uses a credit card to make the purchase without thinking
about how much it will cost to pay off the debt. Or a couple
buys a house without fully understanding the terms of the
mortgage loan. When you choose between two things,
you automatically give something up. A decision to buy an
expensive car is a decision not to use that money to buy
other goods or services, or make an additional payment on
your mortgage, or put extra money in your children’s college
savings fund. Before making that impulse purchase, be sure to
think about the cost of your choices.
2. Invest In Yourself
Education and training is your
investment in you.
Education and training is an important investment in you and
your family. Investing wisely in higher education is one of the
best financial decisions you can make. More education means
higher earnings for life. Studies show more education leads to
bigger paychecks. So, the more you learn, the more you earn.
Over a 40 year career, these additional earnings really add
up. Just by staying in high school and graduating, workers
earn an average of $6,000 more per year, or $240,000
more in their lifetimes. Add a two-year associate degree
from a community college, and the lifetime earnings jump to
$480,000 more than the high school dropout will earn. Think
about it - that’s a cool half-million dollars for finishing high
school and going to college for just two years. The earnings
premium for college graduates? Most bachelor’s degree
holders earn about $1.2 million more over their lifetimes than
high school graduates.
3. Plan Your Spending
Know the difference between net
and gross.
First-time workers often experience shock after receiving their
first check. Income taxes, social security, and Medicare are
just some of the deductions on most worker’s earnings. When
joining the work force, make sure to develop a spending plan
that takes into account the fact that approximately one-third
of your earnings will be deducted from your paycheck.
4. Save, Save More, and
Keep Saving
Practice saving, not spending.
We all know there are more ways than ever to spend money.
Look at saving as spending on your future. Everyone needs
a nest egg or rainy day fund. To build one, it’s easiest to start
small. Save $100 or even just $50 per month by having funds
automatically deducted from your paycheck and placed in a
separate, interest-bearing savings account. Soon you’ll have a
special savings fund that can help you absorb unanticipated
expenses or make expenditures on important investments
such as a home or college.
5. Put Yourself on a Budget
Make a budget, and stick to it.
Financial success refers not so much to earning money as it
does to making wise choices about how to use your money.
A budget is important for you and for your family. Budgeting
2) helps you to better plan and control your family’s spending.
Planning enables you to extend your buying power. A budget
doesn’t have to be complicated. All it takes is writing down
how much comes in every month, how much must go out for
rent, bills, food and other expenses, and how you want to use
what’s left over. Gaining awareness of where your money goes
is key to exercising control over your spending.
a company is legitimate, look it up using a reliable source
such as the DBO or Better Business Bureau. Do not rely on
the contact information in unsolicited emails or letters. Even
if the organization is legitimate, most “free” offers are really
enticements to buy something. When an ad says, “Buy two, get
one free,” realize that you are paying more for the two items
than you normally would. The third item is not free. Beware of
any sales pitch that uses word “free.”
6. Learn to Invest
Investing is critical.
Many people feel “investor” is not a word that applies to
them. In reality, anyone with a retirement account is an
investor. That’s important to understand because many
people working today will not receive a guaranteed pension,
which means they need to save significant sums of money
to finance their retirement. For most of us, just putting
money in a savings account won’t be enough. Investing is an
essential tool for growing your money. Diversified instruments
like target date retirement funds and mutual funds make
investing easier than ever. To learn more, start at the SEC’s
investor education website at http://www.sec.gov/investor.
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CA Council on Economic Education
1-800-845-9799
www.ccee.org
7. Credit Can Be Your Friend
or Enemy
Credit can work for you or against you.
Credit can be a powerful tool to help obtain financial
security. Without credit, most families would not be able to
buy homes or cars they need to get to work. Unfortunately,
credit can sometimes be too easy to get. While credit can be
a great friend, it is very important to know the terms before
you borrow and to be sure credit is the best way for you to
make the purchase. Don’t become a credit junkie. If you are
in serious credit difficulty, seek help from a reputable credit
counseling service.
8. Nothing is Ever Free
If it’s too good to be true, it’s too good to
be true.
It’s best to assume that an offer or advertisement that “sounds
too good to be true” – especially one from a stranger or
an unfamiliar company – is probably a scam. To find out if
2015
CA Department of Business Oversight
1-866-275-2677
www.dbo.ca.gov