Y.O.U.R. Approach to Financial Health
May 23rd, 2006 | by Molly's Brother |Be different. Buck the trend. In 2005, over 70% of Americans had a negative-savings rate. If you were among them revolutionize your life by getting out of debt, building an emergency fund, and opening a path to financial freedom with Y.O.U.R. Approach to building a financially healthy life. You may not become a millionaire in your lifetime, but you will at least sleep better at night (or at least free up your mind to think of more important things to keep you up at night).
Y.O.U.R. Approach consists of four general things to keep in mind in order to help you stay focused, to stay on track, and to live a life of purpose without being a slave to unnecessary debt.
Y: You First. Pay yourself first. Pay yourself first. Pay yourself first. When payday rolls around, before you pay the electric bill or the phone bill or your rent or your mortgage, structure your life in such a way that you can devote 10% to 20% of your paycheck to building that emergency fund (and, once that’s fully funded, continue saving money, but focus on an IRA and other investments).
O: Obliterate Bad Debt. Get the bad debt out of your life. Eliminate credit cards and payday loans. If you have something that is rent-to-own, get rid of it. Focus on acquiring and (someday) paying off good debt, like buying a house.
U: Understand You’re Only Human. You’ll want to attack your financial life with a newfound zeal, but sometimes the pressure of life and the stresses of the day might cause you to make an impulse buy that you can’t afford. You might go out to dinner too many nights in a row. Don’t beat yourself up. Recognize the mistake, change your behavior, and get back on track.
R: Reward Yourself. Every so often–maybe once every three to six months or so–reward yourself. Buy that CD you’ve wanted. Take a weekend away. Splurge on a massage. Of course, with your new commitment to financial responsibility, you will have saved for these rewards and paid for them in cash.
The Y.O.U.R. Approach is a simple to maintain focus and know what you need to do to get where you want to go financially.
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