There Is No Excuse For Financial Ignorance

Category: Finance, Financial Planning.

According to the statistics shared by Mike Peterson, co- founder of The American Credit Foundation and author of" Reality Millionaire: Proven Tips to Retire Rich, " most Americans are losing the money- making game. Only five percent of them will be financially okay.

Take 100 people at age 20 and fast forward them to retirement. That s not even great or independent , just okay. "There are different levels to financial freedom, " says Peterson. "The first level of financial freedom is when you decide to take control of your finances. Eventually we get to what I call ultimate financial freedom. Let s take another step, at the point that you manage your finances and income so you re no longer in the red, but actually have a little money left over at the end of every month. I define that as, where you have enough money put away in investments that are spinning off enough of an income for you that you no longer have to go to work. " Financial knowledge is the key to success. People are responsible for learning all there is to know about finances, preventing money blunders and financial difficulties. Researching all the financial information available is a must to becoming educated in building wealth.

There is no excuse for financial ignorance. Peterson developed a tool anyone can use to start on the road to financial education and freedom. The resources are out there for all to take advantage of. It assists people in being proactive about where they want to be financially and how to reach the wanted results. It is an organized, workable tool anyone can implement. The game assists people in developing ideas and goals, bringing the closer to financial success, one round at a time. Round 1 presents the challenge of determining where you want to be financially.

Writing down these goals brings you one step closer to the financial freedom you have wished for. The most important aspect of this round is setting goals for the future. Round 2 involves becoming aware of where your money goes each month. Continue to spend your money on all the usual items for the entire month. Track expenses for at least 30 days, writing down everything you spend, no matter how insignificant you think it may be. This will give you an accurate account of where exactly you spend your income. Round 5 involves developing a whole new way of looking at finances.

Once you chart where the money was spent, you can develop a plan for saving money in the future, eliminating spending on unnecessary items. It is no longer about looking at monthly statements, but seeing money issues with regard to years in the future. Take a good look into the years ahead, changing your mindset to becoming future oriented. This is very difficult to do when trying to make ends meet month to month, but it is essential to finding financial success. Round 3 is very important. The most important rule to live by is to never charge more on credit cards than you can pay back in the same month.

This is where you take charge of your debt, developing a program to eliminate the debt you have accumulated. If this rule is not followed, winning your way to financial freedom will be a hard road. Even with this type of debt, try to keep it reasonable. Obviously, there are some exceptions to this rule, such as a mortgage and car payment. Decide on what type of car or house you need without becoming exorbitant. Most people who are financially independent are investing their money in various monetary ventures.

Round 4 delves into how to make money with the money you have. It all depends upon interest rates, how stocks earn money, the workings of mutual funds, and how to use them to your advantage. Make sure your assets are invested in IRA s or 401k. Round 5 also deals with investments. Fit these investments into the goals you set in round Decide upon how much you want to risk in these investments. Round 6 explains how to go about investing. Make sure your assets are allocated so if something negative happens in the market, your finances will be covered.

It helps you decide where to invest your money and all the different options available. As the market fluctuates, you can determine the investment possibilities. This round educates you on the difference between personal IRA s, Roth, and 401k. Which investments are less of a risk. Determine the next step to bring you closer to your financial goal. Round 7 deals with investing beyond the IRA.

At this point, a financial planner may be needed to help you make appropriate financial decisions. Round 8 repeats the process of tracking your expenses and rebalancing your investments. Financial planning is an important resource, bringing you closer to your dreams of financial freedom. The market is changing all the time. Keep the fundamentals in mind, weighing the financial risks and rebalancing your investment portfolio to keep your future safe. The risks you were concerned about before may be different now. Make proactive choices annually, keeping your investments risk free.

You now know what to look for and how to go about becoming financially literate and successful. Round 9 is actually a recap of the first eight rounds. It is all about repeating these steps over and over again to stay on the right track to your financial goals. The key is to become aware there is a money game going on. People are playing the financial game every day, whether they realize it or not. Be proactive, following the nine rounds to financial freedom.

Take control of your financial situation, persevere through the nine rounds and you can win the game, gaining financial security for the future.

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