Danny Ippolito shares a few simple, but impactful goals everyone can and should start working toward now.
1. SPEND LESS THAN WHAT YOU EARN
Creating and adhering to a budget is perhaps the most basic of all good financial rules. Learning to live on less than you earn – no matter what –will help ensure that you always have income left over for savings, investments, and for paying off debt. There are many resources available to learn how to manage your finances, including the help of a competent financial advisor.
2. ERADICATE DEBT
For the purpose of this list, let’s ignore the prioritization between “good debt” and “bad debt”. All debt is bad debt and needs to be paid off. Simply put, being debt free is vital to truly achieving financial freedom. It will leave you with more money for saving and investing and even for spending.
3. MAINTAIN AN ADEQUATE EMERGENCY FUND
It goes without saying that we will all face emergencies throughout our lives. Maintaining an adequate emergency fund can help prevent those emergencies from completely derailing our long-term plans. In addition, an emergency fund will help reduce stress related to ongoing income and expenses or volatile swings in the stock market since you know that you have a cash reserve to fall back on if necessary. It will also establish confidence in your ability to save. Simply put – if you can save money for an emergency fund, then you can save money for your other financial goals.
4. PLAN FOR EARLY RETIREMENT
Planning for early retirement has its benefits, whether or not you actually plan to retire early. For instance, saving for early retirement will force you to front load your investment portfolio, allowing you to maximize compounding and not have to work as hard at saving later in life. Another benefit is that you will be ready to retire if poor health or family circumstances force you into early retirement. Even if you do not need nor want to fully retire early, you may wish to downshift and not work so hard. Having a solid retirement plan is paramount. If you aren’t sure where to begin, consider hiring a financial advisor to set a plan in motion.
5. LEAVE YOUR FINANCES AND ESTATE IN ORDER UPON YOUR DEATH
Having an estate plan is not only important to preserving your legacy and making adequate provisions for your loved ones who are dependent upon your financial resources, but also to making sure you don’t leave them with a financial or legal mess. Consult financial and legal professionals to implement an estate plan. An adequate estate plan can serve to protect your assets in life and after your death. It can also minimize the impact of estate taxes if your estate is large enough to be subject to them. Make sure that you have adequate insurance, particularly life insurance. As mentioned in #2 above, make sure that all your debts are paid if possible and that any large or unusual debt can be paid off by a life insurance policy upon your death.
-Danny Ippolito, Law Group associate and Cabana, LLC financial advisor
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