June 27, 2024

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Whether you are just starting on your financial quest or looking to strengthen your money management skills, these ten easy to follow rules will help you build wealth. From saving sensibly to making informed investment choices, each rule is vital to unlocking your financial capabilities.

Rule 1:  Eliminate high interest debt

Make it a priority to pay off high interest debts such as credit cards. The interest on these debts can accumulate quickly impeding your ability to accumulate wealth.

Rule 2:  Create a budget and stick to it

The foundation to any sound financial plan is a well-constructed budget. Track your income and expenses and allocate funds for essentials, discretionary spending, and savings. Periodically review and adjust your budget to stay on track.

Resource: https://www.chase.com/personal/banking/education/budgeting-saving/ways-to-save-money-on-a-tight-budget

Rule 3:  Invest early and consistently

Take advantage of compounding by starting to invest at an early age. Consistent contributions to investment accounts such as 401(k)’s or other retirement and after-tax brokerage accounts can produce significant growth over time.

Resource: https://www.principal.com/individuals/build-your-knowledge/reasons-why-investing-makes-a-big-difference-later-on

Rule 4: Create and maintain an emergency fund

Establishing an emergency fund is key for financial durability. Strive to save at least three to six months’ worth of living expenses in a high interest-bearing money market account. You can use this fund as a safety net in case of unforeseen circumstances; preventing the need to dip into your investments or rack up debt to raise money.

Rule 5: Set clear financial goals

Establish short-term and long-term financial goals. Whether it is saving for a home, funding your children’s education, or saving for retirement, having distinct goals provides direction and motivation for your financial quest.

Rule 6: Take advantage of employer-provided benefits

Contribute to company retirement plans such as a 401(k) or a health savings account. Contribute enough to receive the maximum employer match so you do not leave any free money on the table.

Rule 7: Diversify your investments

Diversification is a risk management strategy that creates a mix of various investments within a portfolio. A diversified portfolio contains a mix of distinct asset styles and types to limit exposure to any single asset or risk. Diversification can help reduce volatility in your investment portfolio and provide more stable long-term growth.

Resource: https://finspireme.com/individual-financial-planning-and-asset-management/

Rule 8: Protect yourself and your family with insurance

Insurance is a critical element of a comprehensive financial plan. Make sure you have sufficient coverage for life, health, and property to protect your income, assets, and loved ones in case of unforeseen events.

Rule 9: Leverage tax-advantaged accounts

When saving, contribute to tax-advantaged accounts first. Whether those be 401(k)’s, IRA’s or Roth IRA’s, these accounts offer tax benefits that can not only boost your savings but also reduce your taxes.

Resource: https://www.experian.com/blogs/ask-experian/what-is-tax-advantaged-account/

Rule 10: Be disciplined and patient

Accumulating wealth is a gradual process. Avoid impulsive financial decisions and live within your means. Do not try to time the markets and stay invested through both good times and bad as investing is a life-long pursuit and the best way to accumulate wealth.

We are here to help. You can get started by organizing your financial life in a single page Asset Map and we will follow up with you.

Resource: https://app.asset-map.com/i/AjzmG54V 

As always please consult your tax advisor or financial professional before implementing any of these strategies.

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Important Disclosures:

Securities offered through IFP Securities, LLC, dba Independent Financial Partners (IFP), member FINRA/SIPC. Investment advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Advisor. IFP and Finspire, LLC are not affiliated.

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