What are the fundamental concepts for financial success?
Building a better financial future is about making smart decisions about your money. This requires that one has an understanding of the basic money concepts. We have our financial expert, Andy Mattingly with us today to talk about what we need to know to make better decisions.
What do you consider to be the most important money concepts that people need to understand?
I believe there are four basic money concepts that drive everyone’s financial life no matter their age or situation. The four are: preparing for a rainy day, developing a smart budget, knowing how to handle debt and living within your means. Crush these four concepts and your financial future will look brighter.
What should people understand about preparing for a rainy day?
This is building an emergency and more. We all need to be prepared for a full range of emergency which is why besides savings everyone needs to have appropriate insurance that includes health, life, disability, auto and dwelling insurance. Without all of these tools a person is really living on a financial cliff.
Are there any tricks to developing a smart budget?
Some people view a budget as a tool to track their expenses but a next level budget or smart budget includes components that can help accomplish long term goals. To build a smart budget, include your savings priorities such as retirement plus debt reduction strategies in the budget. This then becomes a tool to make important life decisions.
What is do people need to understand about how to handle debt?
Most people will need to use debt from paying for college to perhaps one day as part of owning a business. The key is understanding how to handle debt properly and focus the majority of your debt on appreciating assets instead of debt that is used for lifestyle purchase. It is important use your income as a guide to the amount of debt that you accumulate.
How can people make sure they are living within their means?
This is different than not spending more than you earn. People have the means to live a lifestyle beyond their income and if they are not careful, this lifestyle can lead to a financial reckoning. Living within your means requires prudent borrowing, purchasing homes and cars less than you can afford and generally keeping lifestyle inflation in check. Follow these guidelines and your will be living within your means.