The stock market is on a roll, but too many Americans are not benefiting from the gains. Bankrate data shows that fewer than half – 46 percent – of American adults have money invested and even fewer, only 18 percent, of the youngest adults are involved in the market.
Failing to invest because of fear of losing money is shortsighted, the experts advise. Time has proven that a well-balanced portfolio will always produce a net gain. Compound interest is at stake, so investing as early as possible is the best approach.
Now is the time to make the jump if you a beginning investor. If you are more experienced, it may be time to accept a little more risk.
Have a Rainy Day Fund
Things happen. Those who are smart money managers anticipate them and will be prepared. When the car breaks down or your family experiences a medical emergency, a rainy day fund makes the difference between an inconvenience and a disaster. The gurus suggest a cushion of savings that would take you through three to six months of emergency financing. That’s on the conservative side and more is nicer. Having to take out loans or dip into other reserves can set your personal finance plans back for a long time.
Pay Off Debt
Mortgages and student loans can be an annoying reality, but there is no way around them but through them. There are different schools of thought as to how to approach debt – pay off the largest first or pay off the smaller ones first. The Harvard Business Review in a recent article suggests paying off the ones with the highest interest first. Credit cards have notoriously high interest rates, so should be your first targets.
Request a Pay Raise
Last year, only 48 percent of Americans got a pay raise, often simply because they didn’t ask for one. Failing to make a bid for higher wages could cost you lost income over your career. Go to the boss armed with proof that you are worth what he is paying you, plus some, and then be prepared to keep looking at the job market if no raise is forthcoming.
Don’t Spend Too Much
If there is any one truism in personal finances that can’t be argued with, it is the one that says you can’t save anything if you spend it all. Eric Roberge, a certified financial planner and founder of “Beyond Your Hammock” compared spending everything you make to driving a race car at 200 mph with a warped wheel. It simply can’t do anything but lead to trouble. You must make room in your budget for savings or you will be scrambling for money when you need it most. Learn to live below your means.