TEMPLE, Texas — It's a good time during the Olympics here on 6 News to refresh some simple rules for financial success. Just good ideas for smart behavior and discipline that will empower you financially. On this Money Talks, we will start with the obvious.
Certified Financial Planner Neil Vannoy says don't spend more than you make!
"Living below your means is the starting point for financial success," Vannoy told 6 News. "You have to have more coming in each month than going out if you want to avoid debt and be able to build your net worth. This is easier said than done, especially in our "buy now, pay later" society, but like Dave Ramsey says, 'if you will live like no one else, later you can live like no one else.'"
Next, most Americans can't afford a $600 emergency. Try and make sure that you have some cash on hand in case you need it.
“It's important to have a cash reserve to avoid racking up debt or tapping your investments to cover an unanticipated expense," Vannoy said. "For example, our car is currently having some problems, and our cash reserves will help us get through the repairs, whatever they end up costing, without having to resort to credit card debt or ending up with a large loan if we end up having to replace the car."
Also, ask yourself, are you building wealth or living off of your potential wealth?
"When building your net worth, focus on accumulating assets that one, are likely to appreciate, and two, can be converted into income," Vannoy said. "It might feel great to have an expensive house that's paid off, but if you don't accumulate investments, you might have to sell your house later in life to fund your retirement. If you live in it, drive it or wear it, then it's not the right type of asset."
Next rule of thumb, also one we stress a lot, stay out of debt.
"The average American has over $6,000 in credit card debt, according to a study by the federal reserve," Vannoy told 6 News. "And debt like this is often accumulated gradually – rather than all at once – until one day it seems like it's too large to handle. Think twice before using your card to charge your next cup of coffee, meal or spontaneous purchase. Make sure you actually have money to pay for it."
When it comes to your investments, if you can't easily explain it, it may not be the best choice for you.
“When it comes to finances, 'complicated' doesn't always mean 'better,'" said Vannoy. "Be leery of any investment that requires you to sign complicated contracts, disclosure documents or suitability statements. There are plenty of straightforward, easy to understand savings and investment vehicles available to investors."
Vannoy went on to say always shop, shop, shop for the best deals from entertainment services to health insurance costs to interest rates. Save yourself money whenever you can!
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