Are you frugal? Do you spend at will? No matter where you fall on the spectrum, there are a few ways you can direct your cash flow so that you can build a healthy foundation for financial wealth benefit for years to come.
Tip #1: Taxes & Debt
Both of those words might sound like nails on a chalkboard, and that’s exactly why you should pay off both as soon as you can. We’ve talked (and do talk, and will talk) about taxes a great deal, and it’s no secret that paying taxes is your duty as a citizen. In addition, we have spent time in the past discussing ways you can pay and the penalties that come for those who don’t.
Pay your taxes. Just do it.
The debt piece is obviously more nuanced from person-to-person. Undergrad, grad school, credit card, car, home, etc. The (odd yet accurate) analogy of eating an elephant comes to mind — one bite at a time.
Debt is another item I’d love to chat about with you, as we can assess after-tax interest rates and how they might affect potential investments. If you’ve ever ridden yourself of debt before, you know the ensuing freedom. I want that feeling for the entirety of your financial picture.
Tip #2: Hold Wisely
Once the word “debt-free” is within reach of your vocabulary, the real fun begins. What’s the real fun, you ask? It might sound nerdy … but saving and investing are two keys to financial wealth and freedom.
We’ve discussed ways you can save and invest before, but again — you are never too late for either.
Remember, post-tax season offers a fresh start. Let’s make it count!
The first question I’ll ask: Do you have an emergency fund established? This is key to your savings account. It should contain four to six months worth of savings, because life is full of unexpected costs — car accidents, medical bills, stolen items — it’s important to play it safe. After that’s established, then you can save for future costs like a new car, home, and so on.
Investing is another beast … one that can lead to meeting your financial goals way quicker. I strongly recommend sitting down with us to discuss investment opportunities for you and your family. The small cost of a meeting leads to big gains in the future. Financial wealth begins with a plan and we can help you develop one!
Tip #3: Spend Generously
And I don’t exactly mean spend everything you have. Clearly, I led with two things you should do first with your money: pay off taxes/debt and save/invest after you do. But this third step is inevitable — we spend money (most) every day in some form or fashion.
Where are your dollars going?
What is the ratio of money you spend on yourself vs. money that is donated to organizations or people you believe in? One of the most life-giving components to saving and earning money is so that you can help others in the process. What if someday you could invest in someone’s start-up business so that they could pursue their dream? What if you could bless your children and help them with college tuition? There are plenty of ways to spend, but one of the best is on others.
But truly, it is your hard-earned money after all. How you spend is entirely up to you. And it’s a good time when you can treat yourself every now and then. You are human after all.
Just remember that when the aforementioned steps are done first, treating yourself to a new ____ will feel much more special. This whole subject boils down to prioritization. Reversing this order of operations isn’t illegal, but in the long run … it might be detrimental.
Need help getting your taxes, accounting, or financials in order? Emerald Financial Partners can help! Contact us today or schedule a convenient time to talk!