There's plenty in the world to be concerned about right now. ISIS, the US presidential election, the earnings recession, and central bank policies are all things contributing to anxiety about the future. As an analytical person, it’s only natural to try and identify the many roadblocks ahead. For years I've felt pessimism was a form of prudence.
Before you ask “how much risk should I take with my investments?”, you should ask “do I need to take risk with my investments?” Determining the appropriate risk tolerance for your retirement investments is one of the biggest financial decisions you can make. Too little risk can cause you to fall short of your goals, while too much risk can cause swift, massive losses in your portfolio, right at the time you need the money. So, how do you find the appropriate risk tolerance for your situation? Risk tolerance comes down to your need, ability and willingness to take risk. We’ll start by focusing on the need to take risk. You’ll learn how you might have no other choice but to take on risk.
Say what?!? Surely the headline's a typo. Eating out too often has been shown to destroy budgets and slow progress towards reaching financial goals. There’s no way eating out more can be good for our finances, right? Eating out has gotten a bad rap in the personal finance community. However, I’ll show you how sometimes eating out can sometimes be the cheaper option.
I’ve never been a big car person. I can definitely appreciate a nice car, and certainly wouldn’t turn down a free Tesla, but I never felt the need to buy a really nice car. It’s fun riding around in new cars, but, for me, it isn’t worth the high price and monthly payments that come along with the experience. I realize some people are all about cars, When it comes to money decisions, I try to be pragmatic and avoid blanket statements like “you should never buy a new car’ because I realize money can bring happiness when we spend it on the things we like. However, I'll show you how I recently benefited financially from driving older model vehicles.
An emergency fund is a savings account that's designed to help for life's unexpected emergencies. It's also a huge step toward financial peace of mind. The infographic below gives you 5 steps to creating an emergency fund.
Now that you know the 5 Steps to a Fully Funded Emergency Fund, it’s important to define what one month worth of expenses means. You might think it is a simple as looking over your budget to see how much you spend each month, and using that number. However, you’ll hopefully have some areas in your budget that you can cut back on while you go through an emergency. To prepare for a potential emergency, you need to figure out what a bare bones budget would look like. Remember, you only should be accessing your emergency fund when you are in full on crisis mode.
What would you be willing to sacrifice for $1,000,000. Many people decide to sacrifice $1,000,000, without even fully realizing it. What sacrifice are these people making? Is it worth it?
Now you know your current location, you and you have a map. Time to hop in the car and drive! Not so fast my friend. Life isn’t one big joyride. You need to have a destination planned for where you are going. You need to take time to plan what you want your life to look like. What are your priorities?