Playing The Long Game With Your Finances And Winning

| August 9, 2016 | 0 Comments

Improving your finances isn’t solely about lifting yourself from muddy waters and getting yourself on an even keel. You owe it to yourself to do better than that. You owe it to yourself to succeed, to be comfortable and enjoy the results of hard work and smart decisions. You need to play the long-game, to end up with more than you started with. In this article, we’ll be looking at the steps that contribute to a long term financially happy life.

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Start counting pennies

We’re looking at long-term plans. But that means you have to start looking at the short-term and how you get the best out of it, too. If you’re not keeping enough money in the short term, you won’t be able to put much into that long term. So, start budgeting to put money aside that goes into investment and saving opportunities. One of the most common and effective methods is the 50/30/20 rule. Limiting your needs, such as groceries and rent, to 50% of the budget. Your wants, short term pleasures, to 30%. Then putting 20% to improving your finances. Debt repayment, savings and investments. Obviously, those who want to live more frugally are free to skew things more heavily in favor of financial improvement. Adjusting in favor of the other ends of the scale isn’t recommended.

Value your credit

One of the best rules to make sure you avoid disaster is to use cash more than credit. But credit is useful. Credit can help you bridge the gap to make some of the bigger financial decisions in your life. Buying a car. Buying a house. Starting a business. You will get better deals that cost you less if you have healthy credit. Healthy credit is all about proving that you are a reliable borrower. Improving your credit is all about getting debts paid off and keeping up to date on current payments. One tip that isn’t shared as often is to not pay off loans early. Creditors rely on steady repayment of loans. Jumping the gun can be just as much a neglecting of your agreement with them as falling behind is. So be careful with that.

Get the short term out of the way

Have your budget done? Tidied up how you’re managing your credit? Good. Now, there’s one more aspect of short-term financial health to be settled. Simply put, it’s about having a bit of money squirreled away. An emergency fund should be roughly three months’ worth of salary. This can take some time to save up, but it’s a good safety blanket against the unpredictability of life. Putting as much space between you and further debt as possible.

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The end comes first

What is your long term aim? It should be to get to the point where you’re able to put less time into work and just relax as your money grows. Or at least to not have to work well into your twilight years. Retirement is an end to working life that everyone should have prepared. So don’t make the common mistake of treating it like a token contribution. If your employer matches your retirement payments, pay the upper limit of what you can get them to match. Don’t waste a great deal like that. Look at the possibility of getting yourself involved in an IRA or non-retirement accounts as well. A bit of your money should always be going to save for the far future.

Learn the markets

The problem with saving, of course, is that it’s slow. Even compared to the safest of investments. So, investing is crucial. The best, first place to start investing is in the markets of foreign exchange. Forex takes a good deal of learning. Of being able to read the news and see how news (such as a new president) might affect the economy.  Of analyzing currency relationships and using past data to scout out reliable ones. Of different purchasing strategies. However, once you get the terminology and methods down, it’s mostly intuitive. Learn forex from those who can teach it in a course-like setting, so it’s not too daunting. Spend some time with a demo account to get yourself used to it, too.

Diversify your investments

Forex is a great place to really start trading, but it’s not the only place. You do not want all your financial eggs in one basket. Particularly with investing. You should have other processes working to either mitigate your loss or heighten your gains. This is what having a diverse portfolio is all about. Go for safe bets as well as the more immediately lucrative one. Invest in companies you know as well as ones you’re analyzing. Look at securities and fixed-income solutions, as well. By putting a portion of your investment money into safer bets, you’re giving yourself a much needed layer of safety. Even if you are slowing your potential rate of income. Slow and steady wins the race.

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Create a reliable cash cow

The markets are somewhat free from the average investor’s influence. Which makes them relatively safe from your own errors, but also hands-off. If you want a more hands-on form of investment, put that great credit to use. Get a loan and start a business. The investor’s method to starting a business is not about getting struck with a bolt of inspiration and proving an idea’s greatness. Instead, look at the market around you. Look at what it’s lacking. At the safe bets. You want a reliable cash cow, not necessarily a huge brand. Of course, if you’re encountered with an idea that truly does catch your passion, it could be worth it, too.

On your path to financial success, you’re going to have to keep your eyes out for more opportunities than just the ones mentioned. You might find investment or savings opportunities in all kinds of places. Financially savvy means calculating the risk involved, but also taking the occasional risk. Just make sure you’re never playing a hand you can lose too much on.

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