By Eric Tashlein
Your Finances
Eric Tashlein.
How solid is your financial foundation? You may feel secure in your career, but that doesn’t mean you’re on track toward a worry-free retirement. More important than a steady paycheck is your debt-to-income ratio: if your money is going out the back door faster than it comes in the front, you may need to adjust your lifestyle to secure your financial future.
Jobs can disappear and health issues can sidetrack the best of plans. Financial security is the peace of mind that comes with knowing you’ve built up a base of assets to handle setbacks and economic downturns. Here are some ways to get there.
Adjust your mindset. Perhaps you are a highly paid corporate executive and you want to drive a luxury vehicle, take expensive vacations and nestle your family within a suburban McMansion. Consider this: research shows that most millionaires lived below their means and saved their money. It’s pretty simple – if you spend it all now you won’t have enough later. Rather than take pride in possessions, begin to take pride in planning for the future.
Tackle debt. Paying off debt is destructive in numerous ways, starting with the stress that comes from worrying about it. Debt, especially credit card debt, eats away at your financial future because the interest makes everything more expensive than it had to be (and keeps on rising higher), and because every dollar you spend today to pay for previous purchases could instead be invested. In other words, the money you spend to pay for your past should be earning more money for your future. Make your money work for you as hard as you work for it.
Take control. Take the time to write down everything you spend money on and compare the total with your monthly income. Then craft a detailed budget designed to produce significant savings every month. This is just one of many steps on the journey toward creating a solid financial plan that should include retirement planning, tax planning and investment planning, something a financial planner can help with.
Create an emergency fund first. Your initial bursts of savings should be set aside in a special account marked as your emergency fund, containing enough money to pay your bills for three to six months. That will give you the secure feeling of knowing that you can handle unforeseen problems such as major home repairs or the loss of a job. With that foundation you can start saving some serious cash for your future self.
Eric Tashlein is a Certified Financial Planner professional and founding principal of Connecticut Capital Management Group, LLC, 2 Schooner Ln., Suite 1-12, in Milford. He can be reached at 203-877-1520 or through connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice.