Sometimes we prefer to play it safe, even if it means lower dividendsCredit: Image: ntwowe / FreeDigitalPhotos.netJust because all your bills have been paid and your bank balance is in the plus at the end of the month, this doesn’t mean you’re financially set.  This is because there’s a difference between short-term fiscal accountability and long-term financial responsibility.  Certainly, making it to the end of the month is a good beginning. But it’s only a beginning. There are four things that you must do to make sure that you’re really on the right financial track:

Pay yourself first

Paying into a work pension plan is great, but since pensions aren’t always guaranteed and don’t always grow with inflation, you should have another source of retirement income.  Make sure to pay into your savings plan along with your grocery store bill at the end of every month.

Lower your monthly expenses to keep within the red line

Live beneath your means.  The only way people can save is to live slightly below their means, and be content doing so.  While this is easier said than done, the alternative (outliving your money) provides powerful motivation. Just like you can’t have your cake and eat it too, don’t consider yourself entitled to spend your whole paycheck just because you earned it.

Make sure to save on a monthly basis

There’s no fixed sum that can be recommended for all people in all situations.  Save the maximum allowable under your work pension plan and other tax-free saving options.  Then, consult your financial plan to see how much you need to accumulate in order to reach your fiscal goals.  Develop an asset allocation model and appropriate savings plan to reach your target.

Plan ahead

Save today, because you don’t know what tomorrow will bring.  A millionaire once told me he still feels the need to save, since he doesn’t know what tomorrow will bring.  Since no one can predict the future, your best bet is to be as prepared as possible. 

Your savings account is an important part of your financial future.  While you maintain your various taxable and tax-free savings programs, don’t neglect other important pieces of your fiscal future: your emergency fund, life insurance, disability insurance, and long-term health care.


Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.