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Top 5 Tips for Best Financial Health
Just like adhering to proper health habits, like eating right and exercising sufficiently, in order to maintain your physical health, practice proves that adopting proper financial behavior is critical to building wealth in the long term, and dealing with financial emergencies if required. Many Americans with middle class incomes have now come to base their financial conduct based on five simple principles, otherwise known as The Five Fundamentals of Fiscal Fitness©.
The Five Fundamentals for the best personal financial health are:
1. Save at least 10% of annual income – make sure you live within your means and balance your future needs against current ones. To fund your future needs you must save and invest at least 10% of everything you earn.
2. Have sufficient liquidity – you should always aim to pay bills and fund variable short term cash flow needs. This includes your ability to survive three catastrophic events within a six month period and make mortgage payments for 24 months.
3. Fully funded pensions – find out if you are maximizing the utilization of qualified tax shelters, so as to save money on your taxes, and invest it for future needs.
4. Buy the right house for your budget and be a savvy real estate investor – make sure you own the appropriate size home and have positive financial leverage and inflation protection. Furthermore, measure your diversification among three major asset classes of Interest Earning, Real Estate, and Equities. Each class provides major economic functions:
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More from Online Personal Finance...
The Five Fundamentals for the best personal financial health are:
1. Save at least 10% of annual income – make sure you live within your means and balance your future needs against current ones. To fund your future needs you must save and invest at least 10% of everything you earn.
2. Have sufficient liquidity – you should always aim to pay bills and fund variable short term cash flow needs. This includes your ability to survive three catastrophic events within a six month period and make mortgage payments for 24 months.
3. Fully funded pensions – find out if you are maximizing the utilization of qualified tax shelters, so as to save money on your taxes, and invest it for future needs.
4. Buy the right house for your budget and be a savvy real estate investor – make sure you own the appropriate size home and have positive financial leverage and inflation protection. Furthermore, measure your diversification among three major asset classes of Interest Earning, Real Estate, and Equities. Each class provides major economic functions:
- Leveraged Real estate serves as an inflation protection,
- Interest earning provides safety & deflation protection, and
- Equities enable growth during times of prosperity.
And another FREE tip... Go try this Financial Assessment Service for FREE!
More from Online Personal Finance...
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, May 28 2009, 1:21 PM EDT
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