Maintain Fabulous Financials: #4 Invest Long Term
photo credit: wonderwebby
The fourth step to maintain Fabulous Financials is to invest for the long term.
This can mean many things, but I prefer to focus on the following:
Invest IN Self
Before your finances can be fabulous, YOU must be fabulous. This requires a bit of work because it involves self awareness, confidence, and continuous improvement. Do not blame others for your problems, own up to your ish and fix it. How? Through education, applying what you learn, choosing friends who are positive influences, and avoiding complacency - keep learning, keep advancing, and keep improving.
Invest FOR Self
After investing IN yourself, considering investing FOR yourself. Many of us plan to work 30+ years, and if we’re lucky, we’ll live 20+ years after that joyous day arrives. Then what? Life must continue, but the steady paycheck will be gone. The only way to ensure fabulous financials through retirement is to plan NOW. During your years of abundance, always invest at least 10% of your current earnings for your future self. Although the market is volatile, a diversified investment plan with a long term focus should help you weather the storm.
Invest in the Future
Invest in your children’s future by passing on the value of an education. Encourage your children to be the best that they can be. Set an example by being a living example. If possible, begin saving for their college education to alleviate some of the financial strain. All of the above will give them a leg up and have substantial long term benefits.
What are you doing to improve your finances in the long term?
~*~*~*~*~*~Work to achieve, not to acquire.
And always, BE FABULOUS!
This blog is the story of my financial life as a single mom. Subscribe via (feed reader) or (email) to follow the rest of my fabulous journey.
First, I am loving this series! What am I doing? All of the above. I never assume I know all there is to know about something. That keeps me searching, learning and humble. I know my weaknesses and try to shore them up with my strengths.
I have been investing in self since my high school days. I really ramped it up in college and haven’t looked back since. I totally agree with surrounding yourself with positive people who are trying to improve themselves…life is too short for your own unnecessary drama, much less the drama of others.
I think the best thing I personally am doing for the future is to have a habitual process that is implemented automatically. I set my savings goals and expense budget accordingly and take steps to make it automatic so I don’t even have to think about it. For example, every year when the raises come in and we make the new budget, one of first things considered is how much more we can invest or save. Some years it has only been a modest amount ($10-$25/month) and other years it has been much more ($200-$500/month). The amount is not as important as the habit.
PS The new 2009 401(K) limits recently came out - $16,500 for those under 50. One of my tasks before the new year is to work the budget for the new limit and then make it automatic.
Woo hoo @ the 401k limit increase! Thanks for the info. Did IRA increase too? [-SM]
For the rule of thumb above of investing at least 10% of your income, is that gross income or after tax income?
Thanks
If necessary, start out with 10% of your after tax income and gradually increase to 10% of your gross. [-SM]
I’m not investing that much in the market, but I should be. However, I’m not spending 90% of my income, either. About 43% of my net income this year has gone either to investing in the market (about 8% of my net) or to increasing my savings (which I see as an investment in my present and in my future). Investing in your present IS a long term investment.
I am among those who think 10% is way to low. Social security may not be there for the current generation. In fact, I would say that a twenty-something needs to be saving between $1500-2000 per month, which is way more than 10% of most people’s income. To do this most people have to be very aggressive and radical about keeping expenses down. But after 15 years of this, you are basically set.
If you are not saving $1500-2000 per month now, and don’t currently have your retirement savings filled up to what you need to live off of between your current age and 90, it’s time to get radical and do something to improve your position.
I have a simple question I ask myself before discretionary spending: ” : Am I currently saving $2000 per month? No? Then I can’t afford this.
Decision made.
I do, however, dedicate a set amount each month to spend on activities/purchases that can increase my earning power and develop my career. Those purchases are not strictly survival spending (rent, food, and clothes) but are investments and it is a good idea to make them regularly. It keeps you thinking about what you can do to improve your position.