“5 Building Blocks in Achieving Financial Success”

1. DECIPHER YOUR DEBT

Means you need to comprehend your financial obligation. It may seem unreasonable, but
it’s critical to understand and utilize the difference between good and bad debt. Because bad
debt is a debt that cannot be recovered and it is the portion of receivables that can be no longer
be collected typically from loans or account receivable. But good debt can actually mean that
you’ve made a wise investment in your future. For example, student loan debt means you
earned an education to build and secure professional success, and a mortgage means you’re
building equity as a homeowner. Just keep in mind that all debt is not created equal. A seasoned
financial advisor can help you assess different types of debt, how to create the right balance of
debt maintenance and opportunities to save and invest.
2. GET SET TO SAVE
As an individual we must be ready in saving our money. Budgeting is an important part
of being able to pay down debt, since setting up (and sticking to) a budget prepares you to
start saving for the long term. “Think of budgeting as directly financing your goals”
you’ll also want to have money accessible in a liquid fund, such as a savings, checking or
money market account. Ideally, your emergency or “rainy day” savings could fund 6 to
12 months of your basic expenses. Hopefully you won’t ever have to touch those funds,
but if a sudden job loss or other life change catches you off guard, having a backup plan
reduces the likelihood of you having to make other difficult liquidation decisions right
away.
3. BUILD CREDIT TO BUILD YOUR FUTURE
It is the financial status that will be made in the future. However if you know your credit
score, then you know how financial institutions view you, says Garza. But don’t check your credit
score constantly. Checking your score once every six months should suffice, and many credit
card companies provide “soft” monitoring services that won’t damage your score so you can
check more often. Healthy credit is the number one way to ensure you’ll be preapproved for the
luxury car of your dreams, or be able to buy that first (or second) home. But no matter what goal
you’re trying to finance, Garza advises against spending every last time you have. Even when
you’re buying a home, it’s crucial to keep that emergency savings fund liquid to avoid being
caught financially flat-footed.
There are steps should get you on track to proper credit-score hygiene:

 Pay off your credit cards on time, or even early, each month.
 Ask for credit line increases as appropriate.
 Keep older lines of credit and accounts open (even if you don’t use them).
4. INVEST IN YOUR GOALS
Means put money into your plan or objective in life. When it comes to investing in the
stock market and mutual funds, the best time to start is always as soon as possible. It is
stated “There’s no necessary age, life situation or amount of money to begin building
your investment portfolio,” Mulloy says. In fact, starting young or with little money
means you’ll compound more interest for a longer period of time. Each investment type
serves a purpose, such as steady or accelerated returns. When it comes to investing for
retirement, it’s important to make the maximum contribution you can, especially if your
employer offers 401(k) matching. Take advantage of the tax break while also building for
your post-employment years. If you’re self-employed, ask a financial advisor what type
of Roth or Simplified Employee Pension (SEP) IRA, or even a personal 401(k), may be
available for alternatives to traditional retirement contributions.
5. INSURE YOUR FUTURE
Some of us at the early age are thinking about their future on what will happen but there are
times that there is an unexpected situation that we cannot control so we need a secure funds. In
addition we must need an emergency savings fund; insurance policies can help insulate you and
your loved ones from unforeseen life changes. As with investing, it’s never too early for estate
planning. Write down your wishes and select trusted loved ones you’d want to handle your
affairs, both personal and financial, in a crisis. It’s always better to be prepared. It also pays off
to open life insurance policies early, as coverage is based on your health and will only get more
expensive as you age. Lock in a low rate when you’re young, and you’ll likely be able to afford
superior coverage. Employers often offer various types of coverage as well. Ask if your employee
benefits include information about life or disability insurance, or perhaps even cover some
premiums. As Garza says, “Dreams cost money.” Every opportunity to boost your savings and
investments and secure your financial future will bring you one step closer to achieving those
dreams.