Even well compensated individualssometimes find it difficult toachieve long-term success when itcomes to personal finances. Although theymay attain a level of income others envy,their primary focus may be on developingtheir professional careers to the exclusionof securing their personal financial futures.
However, it doesn't necessarily requirea huge allotment of time to getthings moving in the right direction. It isoften simply a matter of understandingand attending to the basics. The followingseven steps are intended to put eventhe most harried and dedicated high-earnersin solid control of their finances:
1. Pay yourself first. Transfer a setamount from your earnings to your savingsor investments each month. Aninvestment of $1000 per month earning8% annual interest will grow to over$180,000 before taxes in just 10 years.
2. Reduce consumer debt. Avoid highcredit card finance charges by paying offthe balances monthly or, if you mustcarry a balance, using only cards offeringlow finance rates.
3. Diversify your investments. Spreadyour risk across many investments, includingliquid assets, mutual funds, stocks,bonds, and real estate. Conservative savingsvehicles, such as annuities and traditionalwhole life insurance, can reducemuch of the risk associated with variablereturn investments.
4. Profit from tax-deferred savings. Ifyou qualify, contribute to an IRA, 401(k)plan, or other similar retirement fund.These plans offer tax benefits that canhelp enhance your retirement savings.
5. Update your estate plan. Haveyour will and any trusts reviewed by alawyer. Prepare advance directives, suchas a durable power of attorney, livingwill, and health care proxy. This is importantfor everyone, since a disabling illnessor injury or an untimely death couldoccur regardless of age.
6. Review insurance needs. Periodicallyreview your risk management program.Your life, health, and disability incomeinsurance needs will likely change as youprogress through various stages of life.
7. Set long-term financial goals.Establish 1-, 3-, and 10-year goals. Evaluateyour progress yearly and make adjustmentsas appropriate to achievelong-term success.
Make a commitment now to start thisplanning process. Attention to theseseven basic areas can help you achieve asecure financial future.
William J. Connington III is a
wealth advisor and owner of
Connington Wealth Management
Group in Pine Brook, NJ. He specializes
in working with health
care professionals who are committed
to long-term investing, improving their
quality of life, and working toward a more secure
future. He welcomes questions or comments at
973-808-8181 or email@example.com.
Securities offered through Linsco/Private Ledger,