Rule No. 1: Never lose money.
Rule No. 2: Never forget rule No. 1. — Warren Buffett
Even if you are a novice in the world of managing your own wealth, you need to think strategically about how you are going to manage wealth.
The phrase ‘wealth management’ sounds like something that is more complicated than it actually is.
These 5 essential tips will help you build your financial well-being like a pro.
Tip 1: Have liquid savings
Illiquidity is a word in personal finance that does not inspire a lot of warmth. Property and jewelry are two examples of illiquid investments that the rich and famous are known for having.
It’s also important to have cash savings that are squirreled away in a safe place especially if you need them for an emergency.
Try to save minimum 20% every month.There is an instant feeling of self-confidence to have cash in your pocket, in the same way that a borrower who likes fast cash loans online, you will definitely prefer having more cash available compared to only having a portfolio of illiquid investments.
Tip 2: Use credit only when you can pay on time
Part of wealth management is knowing how to use credit wisely so that you can use it to your advantage. Credit includes all types of loans such as unsecured loans, mortgages, and a loan for bad credit.
Paying back your credit on time is absolutely crucial for your success which is why you should only use credit if you know that you can pay it back in full every month. A credit history of applying for credit and paying it back on time will helpyou build a solid financial track record that lenders in the future will look at.
Remember, it’s not bad to use credit card; it’s bad to use it for impulse spending that you can’t afford to pay without paying any interest on it.
Tip 3: Have an achievable goal in mind
Wealth management also involves knowing what your goals are. If your dream is to own a home or if you want to buy a car, you need to think and plan your investments to generate cash needed for the big-ticket items.
It’s nice to have a dream to buy a home or even a nice luxury car; however, it’s foolish to dream without planning how to build wealth to buy a home or a car. Every dollar spent by mortgaging your future and happiness can lead your life to financial misery.
Tip 4: Start planning for retirement
Retirement should be on your mind even if you are just dipping your fingers into wealth management. Most people who are passionate about retirement are trying to think about the various ways that they can afford to retire.
For example, this could include paying off the mortgage before officially retiring. Planning for retirement should be a mix of how you want your lifestyle to be when you retire; whatever your dreams are, incorporate them into your wealth management moves now so you can reap the benefits later.
Tip 5: Create a long-term strategy
Wealth management should also be about wealth creation and preservation. The long-haul view is better than short-term ‘get rich quick’ schemes which have plagued some beginners in wealth management.
As an investor, you should be focused on making a long-term strategy that could reap rewards for you in the future. Long term strategy can include interest-bearing savings accounts, investments in property and investing in the stock market, depending on where your interests lie.
Readers: Have you develop a plan for your financial well-being? I’d like to hear your thoughts.
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Photo by: Michle.Johnson