The James Dicks Blog

You’ve heard the old saying, “it’s not what you make; it’s what you keep.” That has never been truer than in today’s very weak economic situation. Everyone has had to change their lifestyle – no matter how much money they are making. I know ”millionaires” who have to change their personal financial habits. It’s tough al over and families have redirected their priorities because of the money question.

So, what’s the answer? One phrase, “spend less – save more.” It’s time to design a very positive approach to actually changing your habits and develop individual goals. This kind of action will better secure your success in obtaining meaningful returns through an actual meaningful reorganization of your financial life. A recent government report showed that Americans cut their spending and saved more for a sixth straight month as more and more people were either worried about finding a job or keeping a job.

Goal setting is another top priority. Determine specific and attainable goals, short and long term, and make sure you write them down. Physically writing them down gives them power. The act of writing and visualizing your goals makes it much more likely that you will actually achieve them.

You must also understand your current financial situation to know where to make your changes. Add up your assets and your liabilities. Find out how much you owe on your home, your cars and your credit cards and conclude how best to shape and maybe cut those liabilities down a bit during the year ahead. It’s always a good idea to get rid of debt, especially high interest debt. You might also consider establishing new insurance needs. Examine the validity of your current life, disability, home, health or auto policies and decide whether changes are required. If you’re like the rest of us, you probably haven’t looked at your policies in quite some time.

Again, the best way to establish a solid financial plan is to save, save, save. The general rule is to put away 5 percent to 10 percent of your take-home pay, if you can. Remember to pay yourself first and don’t wait for what’s left over after you pay your bills. If that’s your strategy, you’ll find it difficult to save anything. You should also be sure to set aside your savings in an interest-bearing account, such as a money market account, or in a tax-deferred account like an individual retirement plan (IRA). If your company offers a 401(k) plan, start contributing as soon as you possibly can, especially if the company matches your contributions. Once you’ve finished the basics, then you can start examining your portfolio and other investment opportunities.

Something else to pay close attention to, especially during this time of the year, is your tax strategy. When you receive your annual W-2s, make sure your monthly tax payments are being deducted at the proper level. The trick is to come as close to breaking even as possible on your federal tax returns. You should keep and invest your money throughout the year rather than allow the government to use your hard-earned cash.

Remember, it doesn’t matter how old or young you are, or how much money you’re making; now is the time to start improving your financial situation. There are a lot of important events in our lives that rely on our financial health – education, weddings, vacations, security, and retirement just to name a few. These times are tough, there’s no doubt about it, but we all must start to rebuild what we have lost and set goals to get back to where we want to be. It’s important and the sooner you start the sooner things will start to improve for you and your family.

Your path to financial success never ends. I know for me, there’s always something new to learn in order to give me an advantage when making my financial foundation even stronger. This doesn’t necessarily mean that you will never reach financial independence; it does mean that once you’ve achieved a sense of financial success, you must keep working in order to maintain your wealth while making it grow steadily. I have found that the best way to do this is to become as educated as I possibly can in the ways of money. But, just like anything else, there’s always something new to learn. Studying about your financial life is going to be a lifelong pursuit, at least it will if you ever hope to be financially successful throughout your life.

The topic of money never remains fixed. Tax laws are always changing, and as we’ve seen recently, the laws pertaining to credit changed and were updated, plus there are always new and different investment opportunities that are developed and must be considered. These are just a few examples; I could list many more, but you get the point. Your financial education on the subject of money will never be finished so just adjust your thinking accordingly. One of the things I suggest is to spend some time researching financial papers and periodicals. So congratulations, if you are reading this, you have already started. Keep it up.

Additionally, there are lots of other methods in becoming a student of money. Many local community colleges offer courses in basic money management, which are normally taught by Certified Financial Planners and other similarly credentialed financial professionals. These classes can be an excellent resource for you. The only caution I’ll offer you about these courses is that sometimes the instructor may use the class as a platform to give out his opinions on how to invest, or even as a means of adding clients to his list of customers. So, you’ll want to pay close attention to the information, and be sure to “weed out” those bits of information that seem to be less than standardized financial knowledge and more financial propaganda or a sales pitch. Something to consider as your wealth builds, you will actually have to spend more time, not less, watching your money. Hey, this is a good problem to have, but it is an issue nevertheless.

You probably spent a lot of time and effort gathering the money you have available to you. So it goes without saying that you must watch out for the scam artists. We’re all familiar with these folks; people who just seem to represent the lowest echelon of human existence. And I’m not only speaking of hardened criminals, but people who live in such a way that their lives are centered on the acquisition of negative energy using risky tactics. Behavioral science has shown us that when honorable people are brought together with those who are less than admirable for an extended period of time, it is very likely that the decent folks will more than likely drop to the level of their counterparts than the other way around. There are a variety of theories as to why this is the case, but chief among them is that it simply requires less effort to fall down than to rise up. The activities in which the less honorable folks are frequently engaged are admittedly very appealing at an instinctive level. So just remember what you were told as a kid – “If it sounds too good to be true, it probably is.” Be careful!

One thing is for sure, it’s going to take a lot of hard work and self-control to build a solid financial future for you and your family. There’s not just one method of doing so but there are certain constants that apply to all of us. One of them is that you will have to commit yourself to getting the education you need and then taking the time to do so. Once you realize that there are hundreds of factors that must be studied, considered and applied every day, you will be well on your way. Start your research today. If there’s one thing that we all should have learned in the past couple of years, the financial stature of our lives depends on the decisions we make today. Poor choices create unfortunate situations when times get tough. Start creating an economically sound plan that will guide you to a more solid financial life for your future.