| I'll try to make this article short and sweet by providing | | | | (new cars, big homes and the like). These things will |
| you with the top tips for improving your finances for | | | | bleed you dry if you're not careful. |
| the New Year. | | | | Create an Emergency Fund: You should aim for |
| Create Goals for Yourself: Unless you write down | | | | between 3 to 6 months of your living expenses. My |
| your goals, they'll just be dreams that go unrealized. | | | | rule of thumb is that three months is adequate for |
| The process of creating goals, writing them down and | | | | someone who has a relatively secure job and six |
| taking action on them almost guarantees you that you | | | | months is for someone who might be a consultant or |
| will achieve them. Setting goals helps create a end | | | | has an unsteady income stream. |
| point and in the process of figuring out how to reach | | | | Start by socking away a set amount each week into |
| your goals, you will develop a plan that you can put into | | | | what I call a Cash Can. Maybe it's $5 or $10, but just |
| action. I create my goals using the B.E.S.T. method. The | | | | do it. You get bonus points if you do it automatically ala |
| letters stand for Believable, Energizing, Specific and | | | | the Pay Yourself First method of using an automatic |
| Time. | | | | transfer from your bank account. Put the funds aside |
| Get a Mentor: Everyone talks about the importance of | | | | into an account that's hard to get to so you won't be |
| having one, well why don't you have one? They're not | | | | tempted to take money from it. |
| hard to find. They could be the successful owner of a | | | | Resolve to Pay Yourself First: The most important bill |
| local business your frequent, a family friend, or a | | | | you have to pay every month is the one you pay to |
| coworker who is investing in real estate on the side | | | | yourself. The easiest way to fail to pay yourself first is |
| while continuing to work full-time. | | | | not to make it automatic, that is, have money pulled |
| Wherever you find your mentor, make sure you | | | | directly from your savings account bi-weekly or every |
| choose wisely and don't have to pay for their services. | | | | month. |
| A good mentor will be willing to help out because they | | | | I have money pulled from one bank account and |
| feel like giving back. | | | | placed in another on the 15th and 30th of every month. |
| More on the subject of Giving Back later. | | | | I did it this way because I'm paid bi-weekly. The reason |
| Invest in Yourself: You are your most important asset | | | | paying yourself works so well is that the money is set |
| and as such you should be investing in well, you. I'm | | | | aside before you have a chance to spend it. Aim to |
| talking about increasing your financial education through | | | | pay yourself at least 10% of your take-home pay. |
| the use of books, web-sites and online forums. I can't | | | | That might seem a little high right now, but that's where |
| stress how important it is to keep on learning after you | | | | the next tip can help. |
| graduated high school or college. | | | | Resolve to Live Below Your Means: One of the seven |
| Just because you're done with school doesn't mean | | | | habits most millionaires have according to the research |
| you can't start your own university of knowledge and | | | | done by Stanley and Danko, the authors of The |
| fuel your mind with the latest information and tactics | | | | Millionaire Next Door, is that of being frugal. Being frugal |
| for investing, budgeting, building your business and | | | | is just another word for Living Below Your Means. |
| investing in real estate. | | | | Living below your means is not the same thing as |
| If you skipped college or never went due to | | | | being cheap, it means choosing not to spend all your |
| extenuating circumstances, you might look into signing | | | | income. |
| up for a part-time program. I got my MBA at night and | | | | It means shopping around for the best deals and not |
| it was a difficult process balancing work and school, | | | | spending all of your raises or bonuses on the latest |
| but I did it and my company paid for most of it. Talk | | | | doodad or gadget. |
| about a win-win situation. | | | | Again, it's not about being cheap or living like a pauper. |
| Manage Your Credit Cards: Pay off your credit cards | | | | It's about choosing not to spend every last dime you |
| immediately with any excess cash you have above | | | | make so you have surplus funds left over each week |
| and beyond your Emergency Fund. If you can't do that | | | | that you can invest and help provide for your future. |
| how about taking advantage of those teaser balance | | | | Max Out Your Retirement Contributions: Politicians |
| transfer rates? Just make sure in your attempt to | | | | passed the 2001 Tax Reform Act and gave you a |
| reduce the cost of borrowing (ie, getting out from | | | | bunch of goodies, the most important of which was |
| under those high interest rates) you don't pay | | | | the increase in the amount you can sock away into |
| excessive transfer fees. | | | | your 401(k) and IRAs on a tax-deferred basis. |
| At some point you're going to have to learn how to | | | | Depending on your income, you can now sock away |
| pay cash for things and/or budget for them. So if you | | | | $12,000 into your 401(k) and $3,000 into your IRAs in |
| want to buy that new plasma TV, I suggest you wait | | | | 2003. You can put away even more if you're over the |
| until you have money (read: cold hard cash) to pay for | | | | age of 50. |
| it. | | | | Give Back: When you take the above advice and put |
| Speaking of setting aside money to pay for planned | | | | the tips into effect, you're going to immediately see a |
| expenses; it's about time you had enough money | | | | change in your lifestyle and your wealth. Be grateful |
| set-aside for unplanned expenses. Just get started. | | | | for what you have and start to give some money |
| See my article resource box for a great resource on | | | | away to charity |
| saving money. | | | | If your budget is currently too tight to donate money, |
| Create a Debt Repayment Plan - Get Out of Bad | | | | how about donating your time? You can volunteer at |
| Debt: Don't sweat it if you're in a hole already and | | | | the local shelter, soup kitchen, boys and girls club or a |
| have a mountain of debt that you need to pay down. | | | | host of non-profit charities. If volunteering isn't your cup |
| Debt is a form of leverage that can be used to create | | | | of tea, how about donating the knowledge in your |
| massive wealth, most notably through real estate | | | | head? Lawyers do pro bono work and just about |
| investments. Using debt to buy an investment piece of | | | | anyone can give away their professional services for |
| property is an example of good debt. | | | | free. |
| You mean there is such a thing as good debt? | | | | Also don't forget you can give away your knowledge |
| Yes. There are two types of debt: good debt and bad | | | | by creating a newsletter or setting up a web-site. It's |
| debt. According to Robert Kiyosaki, author of the | | | | an easy way to give back and help others. |
| successful Rich Dad book series, Good debt puts | | | | That's why I write these articles. It's my way of giving |
| money in your pocket every month. Bad debt takes | | | | back and helping others avoid the mistakes I have |
| money out of your pocket every month. | | | | made, as well as my way of passing on what I've |
| Bad debt will bleed you dry if you're not careful. | | | | learned about investing, personal finance and |
| Resolve to not add any additional bad debt and create | | | | motivation. |
| a debt repayment plan that will eliminate your bad debt. | | | | There are a number of other things you can do, but I |
| Once you have paid of your bad debt, the money that | | | | thought I'd post these main ones to kick off the |
| was going toward paying down your debt can now be | | | | discussion of major things you can do to improve your |
| used to buy investments that add to your wealth. | | | | finances this year and to ensure that this is a |
| In short, don't buy liabilities that are disguised as assets | | | | prosperous New Year for you and your family. |