Everyone carries debt, especially in the United States. The very wealthiest people including Elon Musk carry massive amounts of debt everyday because their relationship with money is a lot different than what most people are usually left guessing about.
Because of this it is crucial to make sure your financial goals are well established, so you can know precisely how to mange your finances more successfully.
Write Down Your Financial Goals
One of the first things you need to do when trying to become financially fit is to first write down some of your financial goals in detail.
Financial goals must actually become a priority; too often, most people tend to not think about their financial goals at all, let alone write them down on paper. The truth is you should not only have short term goals, but long-term goals like getting out of debt, decreasing spending, saving for retirement etc.
Commit to Financial Discipline
After you’ve figured out what you want for your life, the plan should be locked in and stuck to. Too often we see slippage, meaning that it just becomes a good idea to spend like crazy one month or treat yourself to a night out at the casino etc.
If you are a person who does have vices like this, your best bet is to either be disciplined enough to remove these habits, or build the slippage in, because black swan events happen to everyone and you do not want to be massively behind the 8-ball when it happens to you.
Pay Down Your Debt
The next aspect to making sure you are being financially responsible is to start paying off debt that you owe. For the most part, debt is a large obstacle for many people, and unfortunately most people actually make it harder on themselves than they have to. Sometimes the best move to make is getting a small $1000 loan to move around some credit card debt you may have accumulated that have sub-optimal APR rates.
Finally don’t be afraid of seeking advice on this subject. A good financial planner can help you make wiser investments with your money. Investing is a long-term strategy that helps you take your financial plan and make it reality. Most people who begin financial planning will agree that any money they tuck away is money they end up not noticing.
So if you’re the tentative type, start off by taking 10% of your total income and setting it into a “sacred bank account”- that’s a bank account you don’t touch but just keep your money in. Then the next thing to increase that to maybe 15%, and ultimately you can raise it up until the point where you can still maintain your standard of living.
When you actually sit down to create your financial plan you should actually feel inspired! Despite the debt, despite the years ahead of paying back the banks, there are things you can do right now that can help you long-term. In fact, paying back your home sooner than your term last may actually cost you more money, because what happens if you tucked money away for opportunities or investments that grew over a 15-30 year term and profited more than the debt you have?
There are definitely going to be times where paying off debt as soon as possible is advantageous, like when you have to refinance a credit card, again, for example. But changing your relationship with debt and making yourself financially fit, will be the literal definition of rewarding for your future.