The Basics to Increase Purchasing Power as You Invest
Saving more money is always on your mind right; nevertheless, once you start a saving plan something unexpected forever happens! Your dog gets sick; your air conditioner breaks down, or your car needs a tune up. Your wife wants a new blouse, and your child wants a brand-new cell phone. This list can go on forever. You will always find a fantastic rationalizing reason for spending money. You may even be spending money on things you actually don’t need.
If You've Not Been Saving Money, Perhaps You Spend Too Much
When you spend money, the less money you have, in fact, the less you are able to save! If you are not saving money, it is either because you are spending too much money or mishandling the money, you do have. If you’re, unfortunately, not making enough money, you'll have to become creative to find ways to earn more money. If you can't pay your bills on time, you'll need to find innovative ways to making extra money by taking on a part-time job, or by starting a home-based-business to benefit from tax deductions.
Spending too much money is easy to fix! All you need to do is train yourself to practice the art of not spending money on pointless things. Find ways of convincing yourself not to spend money! Instead of buying new clothes, find a stored dress in your closet to wear, to a party instead. A dress can become attractive once more by wearing bright accessories to make it look fresh such as wearing a colorful scarf around your neck or waist. If you find yourself constantly buying stylish shoes, choose to wear your shoes until they are no longer wearable. Then take your worn shoes to a shoemaker to put on a new heal and have your shoe buffed. These small sacrifices will pay you back in the long run, especially when you see your savings account grow exponentially. Believe you can consistently save your hard-earned-money! You can do it once you set your mind on saving!
How to Make Compound Interest Work in Your Favor?
Control as much as you can in building up a mutual savings account for yourself and your family, and make yourself feel happy about your finances. This is always a smart thing! If you feel crummy about your savings, you’ll tend not to want to add money to your saving's account. This can give you a migraine, when you need extra cash to pay for something; you actually need, and must do without it, because you don’t have the money.
You cannot control what Social Security will pay you when you retire, or if you tragically become disabled, but you can control the amount of cash you will have for your retirement. The earlier you start saving for your golden years more money you will have when you really need it, since you can no longer work, because compound interest and tax deferrals will work in your favor over the decades of regular savings.
You obviously can’t control what your employer will pay you for your work, since employees are considered a liability, and capped at a certain salary. But you can look for ways of alternate sources of income, like starting a part-time home-based business. You'll be amazed with your ability to claim tax deductions for the operational costs of your home-based-business. Though you cannot control your taxes, but you can find ways of reducing your taxes. A home-based business is a superb tax reducing vehicle to have on your side!
Remember, Inflation Will Reduce Your Purchasing Power
As the years go by inflation will reduce your purchasing power and lower the value of your savings, but you can find innovative ways to maximizing your investment's potential. The beginning every New Year is the best time to review the capital appreciation of your assets and to speak to a financial adviser about your investment and savings plan. Remember, the higher the interest a financial product pays, the more money you will earn with compound interest doubling your purchasing power.
Calculate the time; it will take your initial principle to double! A good rule to follow is to have your principal initially double within six years, and duplicate again six-years hereafter. You can beat rising costs by making it a habit to save extra money. There are more risks in investing in a single stock; therefore, it is wise to diversify your investment choices. Have a certificate of deposit, an emergency fund, at least two solid mutual funds and invest in a stock fund that looks promising after you have done your stock’s company research.
Saving Money Is Grand! You Need to Make Money to Live Right.
Pay Yourself First at the Start of Every Month
Always pay yourself first by putting your needs and your family’s needs before any other demands on your money. Deposit a set amount of money every single month into an investment vehicle that pays a competitive rate of return no matter what other financial obligations come about. It could be ten or twenty percent of your income or a bit more and watch your savings grow to an amazing level after a few years.
Treat your savings as one of the most beneficial things you can do for yourself and your family. You’ll have peace of mind knowing you'll not ever need to be dependent on your children or be a burden to society by not having sufficient funds to take care of yourself or your family.
Realize the Dollar Has Lost Its Purchasing Power! You Must Overcome This Money Flaw and Save More to Buy More.
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© 2010 Sheila Craan