Achieving Your Financial Goals by Living within Your Meang

Achieving Your Financial Goals by Living Within Your Means

In America, Charles Schwab brokerage firm published a book that states a survey that indicates only 3% of the people in America will wildly exceed their financial goals, 7% will meet their financial goals, 90% will need some form of help from others when they reach age 65.

Simply put, a high school graduating class of 100 people, there is a strong possibility that only 10 people will be able to live financially independent when they reach age 65, despite class, race, creed, # of family members, educational and economic opportunities, job promotion, pay raises and geographic location.

As a member of such a high school graduating class, I started researching 'why' and 'how' was this survey results gathered and was it really reflective of the US population. If the survey results were true, is there a conspiracy by hidden forces to keep a particular race (minority) in economic bondage as stated by Minister Louis Farrakhan in a lot of speeches in the inner city and to his Faith Followers.

My research findings discovered there is a way for anyone who can save $500 to get started in the stock market. Also that there are multiple ways to create paths toward becoming a millionaire over a 40 year span (age 22- 65, most people working years). During this time people will work, marry, have babies, purchase several cars, couple of houses, go on vacation, attend church, get sick, make new friends, give old items to charity.

The number one key that differentiated the members of the 3 categories were personal financial goals, that was having achievable and believable goals. Setting clear expectations and reducing expenses. Therefore, developing a financial plan that consisted of saving a percentage of take-home pay every month of your working life, obtaining insurances at a young age, building an emergency nest egg, establishing a good credit history, and eliminating your mortgage payment as quick as possible, invest in a small business that fits your passion in a growing industry, and living on a monthly budget that does not exceed your monthly income.

As old-fashioned and simple as these findings are, they are not followed by people. Most people make financial decisions by listening to the media (talking heads) about the stock market directions, making must-have consumer purchases based on commercials, that create high levels of consumer family debt. Theoretically, the government encourages consumer spending via debt acquiring to keep the economy afloat. Yet, when you turn 65 - 67, social security provides you with a retirement check for about 19 - 33% of what your last employment paychecks were.

I've discovered a personal financial lifestyle system that de-clutters the mind and budget. It works for a family working towards monthly, annual and lifetime goals and still have lots of fun along the way.

It takes your monthly budget and dividing it into percentage categories: 70% - committed household expenses, 10% - charity or religious donation, 10% consumer debt, and 10% savings. This system works efficiently and effectively towards achieving your family goals. Use coupons to save cost in purchasing groceries, purchase clearance sale items, purchase name brand items at a discount stores, and buy certain items in bulk during certain times of the year..

Let's breakdown your household spending on the 70-10-10-10 system.

70% - spend on committed household expenses

1. 8% medical/life insurance
2. 25% housing
3. 15% groceries and personal allowance
4. 8% utilities and telecommunications bill
5. 4% miscellaneous
6. 10% car (affordable, reliable, economical)

10% Savings

1. Build your emergency savings first (3 to 6 months) living expenses. It may take about (5) years to save this money for the average worker. It will serve as a cushion to absorb (unexpected expenses... auto, layoffs, family) as you concentrate on investment goals for retirement and kids college.
2. Once you have saved 6 months of emergency savings, then you begin to invest in retirement, kids college (so they can be self-sufficient). Then focus on developing your hobby into a million dollar business.

10% Consumer Debt

1. Setting limits on the percentage of consumer debt outside of auto purchases help keeps the 'frivolous spending' down. After reducing consumer debt, you can reward yourself with 'fun money'. Weekend getaways, season tickets to a favorite sport, vacations, etc.

10% Charity Contributions

1. Giving to a local charity or religious organization that provides a service in your community. Although there are many arguments about Christianity and giving (tithes and offering), I know for a fact that GOD is faithful and loving towards you. Giving to help others activates the 'Laws of Reciprocity' towards you. Giving also allows you to share your wealth with the world and live a more fulfilling lifestyle.

Investing in Retirement and Kids College

Warren Buffett, states in the book, BUFFETT, for the small investor the best investment is index funds that mimic the market. The lowest cost financial firm offering these funds are Vanguard Mutual Funds. Dollar-cost averaging is the best strategy to invest for the long-term.

Economist Zvi Bodie, author of 'worry-free' investing, suggest to invest in financial instruments called TIPS (treasury-inflated protected securities) and Bonds, for retirement, risk-free in truly safe assets, you need a higher savings (20%) to achieve financial goals.

Another tip would be to purchase life insurance between age 22-25. Universal (variable) Life insurance to build a high value policy for the lowest price possible.

Consider the following facts, Jane lived in Plano, Texas and Jim lived in Cedar Hill, Texas. The homes were exactly the same size, except Jim house cost about $100K less, Jane put all her money into mortgage and the finer things in life. Jim lived simple and saved. When employers downsized both off from there respective jobs. Jim lived off savings and Jane lived on credit cards. The most amazing result in this scenario was that when both went to file the Federal Taxes the refund was the same. The only difference was that one had saved money, participated at a higher level of charitable giving that helped his community and lived a more fulfilling lifestyle.

I suggest that you find a hero that has achieved your personal goals and become inspired to mimic. Anne Scheiber, is a little known investing queen, according to Money Magazine in 1998, in her lifetime she took $5K dollars and amassed a $22 million in dollar fortune as a small investor who followed a simple formula of buying lowcost blue chip stocks in growing industries and living a simple life.

The next time you go to the MALL, don't become a slave to 'shoulds' that kill your dreams.

Try this personal financial system and see if it works for you. Remember, 'I can't' is really a cloak for the phrase 'I choose not to' be financially independent in my lifetime.