Introduction
In this post, Coach Lyman (#stayfocused) will share tips 4 personal Finance for Young Professional, and why... it is essential to be focused-driven in your life, business, and relationships. The tips explained in this post will help you grow your personal finance, business and relationships as they did for my coaching clients; check out client testimonials for examples.
Why Another Article?
My goal is to solve one major problem that most coaches and entrepreneurs struggle with- a lack of focus, due to distractions, which causes procrastination, which most blogs tend to gloss over or only give partial truths unless you enroll in their "high ticket" coaching program. Not here...
This article will give you the best strategies that I share with my coaching clients that have helped them to get laser-focused, productive, and profitable in their businesses, personal life, and relationships. Subscribe to Your Focused Driven Day podcast by clicking here Connect with me by visiting www.lyman360.com.
Let's dive in now...
What’s one of the main causes of stress? Lack of financial security. One of the main drivers of divorce rates? Lack of financial security.
For an issue that is evidently so common and pressing in modern society, it is very misunderstood and undervalued.
The solution: effective personal finance.
Governments, major corporations, startups and small businesses all depend on solid financial planning to succeed.
Ironically, most individuals that work for these entities don’t put (enough) thought into their own finances, however.
That’s where personal finance steps in. In essence, personal finance relates to financial planning for individuals and families - often with the future in mind.
Saving and investing wisely as soon as possible can save a lot of headaches down the line, and even reward you.
Starting proper financial planning at age 25 rather than 35 can save you hundreds of thousands, or even millions, of dollars.
If you’re a youngster that is working or just about to enter the job market, this is easier said than done.
Follow these 4 tips to push yourself in the right direction
1.Plan ahead
This is the broadest and first thing you need to consider. What are your goals in life and what will they require financially?
If you’re a highly career-oriented person with no intention of getting married and starting a family, your personal finance roadmap is going to be very different from someone that wants to marry and focus on a family life.
Your approach to spending, investing and saving is going to depend on what you want to achieve later on, especially by the time you retire.
Are you the type of person that wants to own high-end properties and vacation at exotic destinations? Make sure your personal financial planning reflects that dream.
2.Start budgeting
Most people, especially younger ones, have issues with controlling their spending habits. Sitting down and creating a budget is a proven way to curb that problem.
All you need to get started is a spreadsheet. Then, create two columns: income and expenses. The idea is ultimately to have income exceed your expenses while still living a healthy and sustainable life.
One of the benefits of putting these numbers down on paper – or a screen – is so you can accurately track your expenses and work towards minimizing them.
Many people realize that seemingly inexpensive (daily) extras, like a branded take-away coffee, can add up significantly to hundreds or thousands of dollars a year.
Once you have your fixed and other costs down, you will know how much to put aside as savings and what discretionary income you can realistically spend without getting into trouble.
3.Open a savings account
To put your budgeting into action, open a savings account with your bank. Placing money into savings is the most traditional way to build up wealth for the future.
What makes it so effective is that compound interest does all the work for you in terms of growing that wealth.
A paper published in 1994 by USAA shows the impact of starting early with putting aside money into a savings account every month. Assuming you invest $250 every month with an 8% annual return:
•If you start at age 25, you will accumulate $878,570 by age 65;
•If you start at age 35, you will accumulate $375,073 by age 65;
•If you start at age 45, you will accumulate $148,236 by age 65.
In this example, starting at age 25 will earn you $730,334 more than if you only start at age 45. Take a moment to think about that!
4.Invest in passive income streams
Another way to complement a savings account is to start investing in passive income streams.
More specifically, in (relatively) safe assets like dividend-paying value stocks, government bonds, and certain funds.
Investing in safer assets is a reliable way to build wealth long-term without having to spend time and energy doing complex financial analysis.
Day trading and picking stocks are full-time jobs, so don’t “follow the herd” by investing in risky assets that are highly speculative unless you have the time to do so.
Value stocks, in simple terms, are high-quality stocks that are undervalued by the market but have strong fundamentals.
On average, most established and less-risky firms fall under this definition. Ideally, invest in those that pay dividends – these are guaranteed payments you will receive on a regular (usually quarterly) basis.
Government bonds also provide regular payments and return the principal amount when they expire. Since they are backed by the government, they are the safest form of bonds.
Lastly, you can look at investing in low-cost index funds and exchange traded funds (ETFs). As opposed to individual stocks, their returns reflect the overall market or industries and are thus less volatile over time.
As many investors will say: at the end of the day, the market always wins, so beware of that, regardless of the choice you make!
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About the Author
I was highly distracted, chasing every new hack, magic bullets, or never before revealed strategy only to end up frustrated, stuck, and waiting for the next trainer, coach, guru to sell me something I didn't need. After years of running in place, I decided that true transformation depended on me, so I learn how to focused my mind and attention using a set of skills and techniques, and within a matter of weeks, my life, and business changed. To save you from my mistakes, I decided to write a blog that would actually give tips and strategies that worked. The second reason for this blog is to combat the irrelevant and inaccurate misinformation out there on how to become better focused, productive, and profitable.
My goal is to solve one major problem that most coaches and entrepreneurs struggle with- a lack of focus, due to distractions, which causes procrastination, which most blogs tend to gloss over or only give partial truths unless you enroll in their "high ticket" coaching program. Not here. This blog will give you the best strategies that I share with my coaching clients that have helped them to get laser-focused, productive, and profitable in their businesses, personal life, and relationships. Subscribe to Your Focused Driven Day podcast by clicking here and connect with me by visiting Lyman360.com.
