Tricornered hats, fancy waistcoats, and tight knee-breeches. For many Americans, this is what comes to mind when we think back to July 4th, 1776. Perhaps that is understandable. We are now—today—almost 250 years removed from the birth of the nation. But is there anything else about revolutionary America that might help us feel closer to our founding fathers?
This question was recently taken up by New York Times bestselling historian and author, Thomas Fleming, in his book What America Was Really Like in 1776. What was Fleming’s conclusion?
“Those Americans, it turns out, had the highest per capita income in the civilized world of their time. They also paid the lowest taxes—and they were determined to keep it that way.”
Today, as we celebrate our nation’s independence, we have an opportunity to reconnect with the spirit of pragmatism that drove America’s founders to take control of their financial lives. More than nostalgia, tapping into our national instinct is more important today than ever before, as life in America gets more complex and onerous with each passing decade. Tax laws, retirement planning, Medicare enrollment, Social Security planning, benefits selection, education planning, health care expenses, budgeting, purchase decisions, cash management, credit cards, estate planning, insurance planning, liability protection, asset protection, gift strategies, debt repayment, wills, trusts, incapacity planning, financial aid, credit management, student loans, charitable giving, and legacy planning. We believe your financial freedom is as important today as it was for the first generation of Americans. Sometimes, it just helps to have someone put all the pieces together for you. As always, our team of CERTIFIED FINANCIAL PLANNER™ professionals stands ready to assist: email@example.com.
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Managing finances for many people is difficult and for some can be overwhelming. This is not because people are incapable of managing their finances, but rather they have never been shown how to do so. Basic finance like paying bills and understanding taxes is not taught in schools and most of us did not learn from our parents (or were taught bad habits instead). Below are some tips to help you effectively manage your finances:
1. Keep it simple
Life is complex enough and often the best strategies in life are the simplest. Managing your finances should be the same way. Try and automate as much of your finances as possible. For example, have direct deposit set up and on payday have your bills be paid electronically on the same day. Automate some form of savings as well on each payday to build your wealth as well. In this process, the rest of the money left over can be for you to spend.
2. Pay yourself first
It is important to make sure you save money into a savings account each payday. You want to have at least 3 – 6 months of living expenses so when something happens like a job layoff you do not have to take on debt to manage the situation.
3. Use technology
There are many great tools out there for free to help you manage your finances. For example, your bank should provide a tool to help you track your budget. Your credit card carrier should provide a free resource to track your credit. If these tools are not available use 3rd party tools like www.creditkarma.com for monitoring your credit.
4. Be honest with yourself
Take a close look at your spending habits and understand what bills are necessary like rent and utilities. It is important to identify bills that are non-essential items like eating out, buying expensive items, etc. and work on reducing those expenses. The idea here is to not say you can’t have fun but work on making sure you enjoy life while still focusing on long term goals. Your $3 latte each day is not what is keeping you from being a millionaire. Just focus on spending less than you bring home and monitor your progress over time to help ensure you stay on track.
5. Be kind to yourself
Managing finances is hard and there are a lot of emotions mixed with our money. If you make a mistake do not beat yourself up but acknowledge it and move on. The only mistake in life is not learning from our mistakes.
Also, you do not have to do this alone and there are professionals out there (like us) that are happy to help you!
If you missed our Money Mastery webinar series, we discussed strategies to pay down debt and tips to create healthy financial habits. Check out the series by clicking here.
If you missed our Money Mastery webinar series or just want to revisit any portion of the series given by our CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals, the replays are now available OnDemand by clicking the links below.
Connecting the Dots to Your Financial Future (Part 1) – Learn the importance of creating a budget, strategies to pay down debt, and tips to build and maintain good credit.
Connecting the Dots to Your Financial Future (Part 2) – Create healthy financial habits and learn about the keys to investment success.
A Definitive Guide for Education Planning – Understand your options with student loans and learn about the best ways to save for college and maximize student aid.
The 4th of July is fast approaching and is a celebration of our country’s independence. It should also serve as a reminder to all of us the freedom we have and strive for. This would include trying to achieve financial independence. Financial independence can be hard to define since these words conjure different meanings for each of us. No matter your personal definition, there are some basic tenants that are important to achieve financial independence.
1. Spend less than you earn
It is impossible to have financial freedom if you are spending more than you earn. To be on the path to financial independence it is important to have a plan and stick to it. This seems obvious but it is surprising how many people do not practice this. For the most part no debt is good debt. Some debt is beneficial to help you move forward in life, namely school loans and mortgage debt. But the reality is the lower the debt you have, the easier it is to live the lifestyle you want.
2. Save and Invest Regularly
We know life happens and it is important to have an emergency fund for life’s unexpected turns, as this year has shown. Your emergency fund is the most important place to save and try to keep 3 to 6 months’ worth of living expenses in savings. Investing on a regular basis is the best way to achieve financial independence over time.
3. Always be learning
So many people become complacent in life. There is a strong correlation with wealth and education and reading. Individuals that continue to be students in life and continually learn and grow their skillset typically are on the path for financial independence.
4. Take care of yourself
It is important to take care of your mental and physical health. Prevention is the best medicine and taking care of yourself physically and mentally reduces stress, anxiety and increases your mood and performance.
5. Have patience Financial independence does not happen overnight unless you win the lottery. Since winning the lottery is not sound financial advice the best way to achieve financial independence is to be consistent and intentional over a longer period. Remember you run a marathon one step at a time, one mile at a time.