What do you think about your finances?
How do you feel things are working out for you? Are your needs being met? Do you own already a house, a car or could you simply go on your dream holiday?
No? Well you have to improve your relationship to your money! If you would like to improve your finances you should remember this: you have to appreciate the money, so it can appreciate you in return.
One of the top qualities people value in any relationship is loyalty. Treat your money well and it will be around when you need it most. Here are three ways to get your money work for you:
1. Do not hide it under your mattress. For your money deserves something better. This means putting your cash some place it can earn more money for you. Do not offend it by locking it up in a pitiful savings account. On average, traditional bank savings accounts pay 0.4% on deposits only.
2. Spend it sensitive. Unwise spending and being oblivious to your bad habits are surefire ways to doom your financial relationship.
But too often we are careless and insensitive in less obvious ways. Little things matter, and you want to do everything you can to make sure your money saves its benefits only for you -- and does not spread them around to others like Uncle Sam, your bank or credit-card company. Here are a few ways to make sure you keep more of your money:
- Do not overpay Uncle Sam when it comes to taxes.
- Pay off your credit card balances in full each month so you will not have to pay high interest charges.
- Get a rewards credit card that gives you free cash, travel or merchandise.
- Take advantage of lender incentives to lower your student loan rates.
- Know how to use your credit wisely, to avoid sabotaging your credit score.
3. Plan for your future. No doubt you dream about your future, and no doubt that future involves growing old together with your money. That means you need to make long term investments.
When you are in your twenties and thirties, the place to show your money a good time is in the stock market. And the best way for beginners to jump in is through mutual funds that invest in several different stocks. On average, since 1926, stocks have returned 10% annually (7% after inflation), according to Ibbotson Associates. That's tough to beat elsewhere.
Sure, you will have your ups and downs. But just as any relationship grows by small acts of love, so will your money grow. Contributing little amounts of money steadily over a long period of time can add up to big bucks. For example, if a 20-year-old saved just $100 a month in a fund earning 10% annually, he would have nearly $1 million by the time he turned 65. And if he increased his contributions as his paychecks increased, his money could grow to $1.5 million or $2 million.
If you follow this simple steps your relationship to you finances is going to be a happy one.
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