Inheritances aren’t the only thing mismanaged. Raises also get blown, as does extra money in the budget after a car or home is paid off. Recently low mortgage rates have led to spare cash for those who have refinanced.
The decision on what to do when income or assets increase is pivotal in a person’s life. That decision sets apart those who become wealthy and those who struggle financially.
It would be unreasonable to expect people never to improve their lifestyle as they experience increases in assets and income. But if extra savings does not accompany those increases, people will find their net worth frozen in time.
The first step to handling new money is to decide beforehand how you will use it to increase savings. Choosing to save money before it arrives is vital.
That decision is easier when you have long term goals and vision. Working with a financial planner or consistently referring to a financial plan will help.
Keep new money out of your checking account. Once new money arrives, put it where your debit or credit card can’t reach it. Some people use investment accounts or savings accounts that are at arms-length of the checking account.
Financial security isn’t as exciting as an Amazon package for most people. But it can be. It is a great feeling to see account values, and net worth grow.
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