Have the recent stock market fluctuations shaken you up? While you may never have the money that Wal-Mart founder Sam Walton had, you can still learn from his frugal attitude towards the green stuff. Whether you are valued at $5,000 or $5 million, here are some tips from The Wall Street Journal for holding on to what you have and building for the future.
The very wealthy have a plan.
Enlist your significant other or friend to check in with about your finances. If you are paying down debt make a schedule that you will stick to. Create a budget together and then have weekly check-ins to see where you’ve stayed on course and where you need improvement.
The very wealthy live below their means.
Don’t spend everything. Don’t mortgage yourself up to the eyeballs. Find an apartment that meets your needs while also keeping you comfortable. Firstapartmentguide.com suggests that no more than 30% of your gross income should go towards rent and utilities. If you need to, share an apartment. Keep a cushion in case you lose some income.
The very wealthy value cash flow.
The rule of thumb from certified financial planner Nancy Langdon Jones is to keep enough in savings to weather six months. That may not be possible for you. Instead, keep a SWAN account—sleep well at night. Sounds nice, doesn’t it? Even if you have high credit card bills, you need an emergency account. Pay near the minimum balance until you have enough money saved to sleep well at night. You can decide how much that is when you don’t wake up terrified.
The very wealthy focus on risk, not return.
Investing in anything is risky. Know what you can reasonably risk and stop focusing on potential big returns. Maybe a $1 and a dream is all you can afford right now. Focus on getting your finances in order before investing. Buy a condo before buying a home that you will have to maintain, but if buying a co-op watch out for fees.
The very wealthy hang on.
Fear is a good thing. Don’t panic and sell your home because the price is decreasing. Likewise, don’t move to Tennessee to avoid state income tax before considering other aspects of your life. There are other things in life than money—family, friends, and community—a network of support in case you run into difficult times.
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