Keys to Financial Success

1. Make money.

2. Don’t spend it all.
3. Pay off any high-interest debts.
4. Start saving and investing as soon as you’ve paid off your debts.

Tips for Finding Money to Save or Invest
If you are spending all your income, and never have money to save or invest, you’ll need to look for ways to cut back on your expenses. When you watch where you spend your money, you will be surprised how small everyday expenses that you can do without, add up over a year’s time.
How much does that cup of coffee actually cost you?
Would you believe $465.84? Or even more?

Here’s how that works. If you buy a cup of coffee every day for $1.00 (an awfully good price for a decent cup of coffee, nowadays), that adds up to $365 a year. If you saved that $365 for just one year, and put it into a savings account or investment that earns 5% a year, it would grow to $465.84 by the end of 5 years, and by the end of 30 years, to $1,577.50.

That’s the power of “compounding.” With compound interest, you earn interest on the money you save and on the interest that money earns.
Over time, even a small amount saved can add up to big money.
If you are willing to watch what you spend and look for little ways to save on a regular schedule, you can make money grow. You just did it with one cup of coffee.

Remember that if a small cup of coffee can make such a huge difference, start looking at how you could make your money grow if you decided to spend less on other things and save those extra dollars.

If you buy on impulse, make a rule that you’ll always wait 24 hours to buy anything. You may lose your desire to buy it after a day. And try emptying your pockets and wallet of spare change at the end of each day. You’ll be surprised how quickly those nickels and dimes add up!

Pay off Credit Card or Other High-Interest Debt
Speaking of things adding up, there is no investment strategy anywhere that pays off as well as, or with less risk than, merely paying off all high-interest debt you may have. Many people have wallets filled with credit cards, some of which they’ve “maxed out” (meaning they’ve spent up to their credit limit). Credit cards can make it seem easy to buy expensive things when you don’t have cash in your pocket - or in the bank. But credit cards aren’t free money.

Most credit cards charge high-interest rates - as much as 18 percent or more - if you don’t pay off your balance in full each month. If you owe money on your credit cards, the wisest thing you can do is pay off the balance in full as quickly as possible. Virtually no investment will give you the high returns you’ll need to keep pace with an 18-percent interest charge. That’s why you’re better off eliminating all credit card debt before investing savings.

Once you’ve paid off your credit cards, you can budget your money and begin to save and invest. Here are some tips for avoiding credit card debt:
• Put away the plastic
Don’t use a credit card unless your debt is at a manageable level and you know you’ll have the money to pay the bill when it arrives.

• Know what you owe
It’s easy to forget how much you’ve charged on your credit cards. Every time you use a credit card, write down how much you have spent and figure out how much you’ll have to pay that month. If you know you won’t be able to pay your balance in full, try to figure out how much you can pay each month, and how long it’ll take to pay the balance in full.

• Pay off the card with the highest rate
if you’ve got unpaid balances on several credit cards, you should first pay down the card that charges the highest rate. Pay as much as you can toward that debt each month until your balance is once again zero, while still paying the minimum on your other cards.