By Michelle Shank
Short-term financing has played an important role in helping an individual establish a stable financial future. Education improves opportunities in finding a stable career. If someone is not educated in the field that he or she wants a job, then an employer will probably not hire him or her for that particular position. Training for a job is needed before starting work. However the more time spent on education, the more money a person may owe to pay off student loans. Loans can total as much as $100,000 or more! The area that someone is educated in and their interests will affect the jobs found. A person does not desire to work at an unenjoyable job for their entire life. Sadly, this remains a reality for many people. The job will add strain to family life and cause more stress than necessary. The more time spent on improving oneself and learning new skills, the more someone can advance in their career. Life outcomes are sometimes controlled by personal choices, but other outcomes are random and out of control. The choices that can be controlled should have a strategy behind them. An individual needs to work towards a goal in the future instead of living day by day hoping for future success. Working towards a goal in a slow and conservative way allows for clear thinking. Collecting information and asking questions aids in making difficult decisions. A person should try to know as much as possible about a decision before finalizing it. An adequate job can allow someone to live the life he or she wants, but the person should remember to live within his or her means. Debt does not provide for an ideal living situation.
If someone makes a high income, then he or she may allot part of the money to spend making his or her life more pleasurable. Also, enough money needs set aside to pay expenses such as food, clothing, a place to live, and annual taxes. A rainy day fund consisting of ten percent of an income should be put in a savings account each pay check for the uncertainties in life. The total money saved depends on the amount earned. Higher earnings yield higher savings. Savings must become a priority. Three basic reasons for saving money include an emergency fund, purchases, and wealth building.
For smart and safe keeping, the emergency fund may reside in a money market account from a mutual fund company. The emergency fund serves as insurance instead of an investment. Rather than borrowing to purchase, cash can be paid with a sinking fund approach. Preauthorized checking withdrawals require discipline for wealth building. Compound interest works over time, and the rate of return will make a difference in how large the investment grows. Keys to saving include discipline and focused emotion. With virtually all investments, the potential return goes up with increased risk. Single stock investing carries an extremely high degree of risk. A stock purchases a small piece of ownership in a company. The return comes as the company increases in value or pays a portion of the profits. Money market mutual funds are low risk money market accounts with check writing privileges. Mutual funds provide for long-term investments. Poor investments include gold, commodities and futures, day trading, and viaticals. A purchaser should understand where the money is placed. If a person does not understand an investment well enough to teach someone else how it works, he or she should not buy it.
When saving for college, someone should not save using insurance, savings bonds, or prepaid tuition. Going to college does not necessitate a student loan. Debt has been marketed to us with such intensity for so long that to imagine living without it requires a completely new way of thinking. First used in 1950, credit cards began an acceptance of debt. When it comes to buying expensive goods, it is fine to purchase used. Eventually, enough money will be saved to buy new items. A combination of money management skills including short-term financing can help an individual achieve a successful financial future.