Golden Girl Finance | August 29, 2013

Forget blind luck - you have the power to ensure you make long-term progress each and every day...month...year...

You go to work, collect an income, and pay your bills on time. You diligently send off checks for your long-term obligations. You pay off your credit card minimum (and more) every month. And then a new month begins…and you do it all over again. That’s good money management, right?

Not so fast. Sometimes we get so used to doing the bare minimum that we get stuck; we’re working hard, but our finances have flat-lined. The truth is, most us could be doing a lot more to get ahead. If we did, we could improve our financial picture each and every month – and forever.

Yes, dare to imagine the future: It will be richer – if you follow a few key rules…

The 5 rules for getting ahead financially

  1. Keep paying it forward

Maybe you make the last payment on a big credit card bill or finish paying off your car and think, “Suh-weet! Now I’ve got extra money to play with!”

Not if you’re on the get-ahead plan, you don’t.

What to do? Diverting that amount of money toward a new goal is the best way to keep moving forward. So, if you finish paying off a car that had a $300 monthly payment, start putting that money toward your credit card debt, your mortgage, or just into a savings account. If you don’t make a plan for it, chances are it’ll disappear fast – and you’ll be left with nothing to show for it.

  1. Set new financial goals

Want to know what really kills long-term financial success? Not setting goals. Without goals, money tends to go wherever, whenever - which means it usually goes toward the things that catch your eye first. Your mortgage, your debts and your savings account usually aren’t flashy enough to make the cut.

What to do? Set long-term financial goals and reassess your process and your progress every time something changes. Did you get a big raise? It’s time to figure out how to put that money to work. Are you stepping back from work to have a baby? It’s time to adjust to make it all fit into the big picture. In fact, everything should be assessed as part of the bigger picture, whether it’s a new handbag or a new house.

  1. Kick new costs to the curb

Expenses have a way of creeping up on us. Your cell phone plan expands. You get better cable. You get used to enjoying a few new indulgences. It can happen so easily we hardly even notice it. Of course, that’s what product and service providers are banking on. The problem is that this creep can put a huge dent in your disposable income, and leave you running on the spot rather than moving your finances forward.

What to do? Keep an eye on expenses every month, and avoid adding new ones whenever possible, especially recurring ones. Then be sure to make plans for your money and follow through. Automatic withdrawal to a savings account can be a life-saver here.

  1. Trick yourself

When it comes to saving and investing, we’re often our own worst enemies. Our consumer-cultured brains tend to be highly skilled at talking us into buying things we want and can’t afford – and not-so-skilled about ensuring that we follow up on our savings plan.

What to do? Instead of leaving your finances up to chance, find small ways to coax extra money into your savings account. If you used a coupon, bank your savings. If you talked yourself out of a new pair of shoes, pay that $100 (or $200 or $300) to your savings account instead.  And be sure to make those savings harder to access by disconnecting them from your debit card. You can also set up automatic direct deposit to a savings account, as well as avoid carrying credit cards or too much cash when you’re likely to be tempted to spend. If you make saving easier and spending less convenient, you’ll do more of the former and less of the latter.

  1. Take little steps

When it comes to big financial goals, it’s really easy to get overwhelmed and throw in the towel because those big savings goals seem so far away and, frankly, unattainable.

What to do? If there’s one word the matters in personal finance, it’s progress. If you give budgeting, saving and investing your best shot, you’ll get there. Or at least you’ll get somewhere. You might not be uber-rich or retire when you’re 35 (although that isn’t impossible), but at the very least, you’ll be establishing good habits, building toward future goals, and getting there a little bit at a time. Some years you’ll earn a lot of money and make a lot of progress. Other years might be slow going. But if you keep your eye on the prize, you’ll be able to improve your financial security and your net worth little by little. That might not be exciting, but it sure is empowering.

Slow and steady?

We often assume that financially successful people are those who won the lottery, inherited millions, or started a company that earned them an overnight fortune. Those are just the most obvious examples of people who, through either hard work or just sheer luck, secured a better financial future. They’re also pretty rare. But what about the quiet couple who retires happily and comfortably after saving for years, or the single mom who puts three kids through college? Those are financial success stories, too. In fact, unlike the flashier examples of financial success we see in Fortune magazine, most people achieve their version little by little, month by month, over many years. And so can you. All you have to do is keep moving forward.