5 Key Pillars of Personal Finance

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Your financial future rests on never losing sight of five key pillars that hold up everything that rests upon them, all the investment strategies in the world will not benefit you if you’re not adhering to these personal finance fundamentals.

Prioritize health and health insurance

Like the old saying goes: “Health is wealth.” If you aren’t healthy, it could prevent you from doing everything else you need to in life. However, prioritizing your health doesn’t stop there. You need to prioritize your future health as well, and that’s where health insurance becomes vitally important. It only takes one major, unprepared for a medical emergency for yourself or your family to strip you of all your savings. Health insurance protects you from sickness devastating, not only your health but your financial future.

Save, save, save

Another old saying: “A penny saved is a penny earned.” Getting ahead and making financial gains through investments is impossible without saving. And yet another saying: “It takes money, to make money.” You need to have extra money you are not dependent on for your everyday needs in order to invest. This requires savings. Taking on debt to make an investment is a terrible idea. Break the spending habit, and improve your saving habit.

Eliminate debt

A barrier to saving his debt. Granted, not all debt can always be avoided. However, make a plan for paying off debt as quickly as possible. Pay more than the minimums to reduce the interest you have to pay on the debt. Only take on debt when there is no other viable option and can’t be avoided.

Avoid high risk investing (i.e. get rich schemes and gambling)

Personal wealth takes time to grow. It’s a process of continual wise moves. Most investors achieve a strong financial portfolio by calculating and spreading their risks, i.e., diversifying investments. They invest their money over a range of risk types (low, moderate, high). Those new to investing should focus first on safer, low-risk investments. Gain experience first before taking on higher-risk investments. Then, when taking on higher-risk investments, keep the investment amount low, in terms of the overall allocation of your investment monies. For example: only investing 10 percent of your money in higher-risk investments, while putting the majority of your funds into low and moderate-risk investments. As they say, “There is no such thing as a free lunch,” meaning, everything comes at a cost. There are no get rich quick schemes, one is simply gambling, and the house usually wins not the gambler.

Get experienced and/or expert help

Don’t try to do or figure everything out on your own. This is especially true if you are new to investing. Get experienced and/or expert advice when you find yourself unsure when trying to solve financial problems. It’s not embarrassing to ask for help. But it could be very embarrassing to dig yourself into a hole and lose all your money because you didn’t ask for help when you really needed it.