Achieving financial success isn’t just about clocking in, working hard, and collecting a paycheck. It requires making informed, deliberate choices about how you manage your money to ensure a stable future. In a world where economic uncertainty is becoming the norm, it’s critical to establish strong financial habits that can provide security throughout your life. But as any expert will tell you, it takes discipline, strategy, and long-term planning to turn financial aspirations into reality.
Here are seven key strategies from top financial experts to help you build a successful financial future.
1. Make It Automatic
Robert R. Johnson, PhD, CFA, and finance professor at Creighton University, emphasizes the importance of automating your financial decisions. “One has to make saving money a habit,” says Johnson. “And habits—whether good or bad—develop over time.” He suggests automating savings by setting up direct deposits from your paycheck into an investment fund, particularly a low-cost stock index fund.
By automating your savings, you practice “dollar cost averaging,” meaning you consistently invest regardless of market conditions. This disciplined approach allows you to avoid the emotional pitfalls of trying to time the market and helps build significant wealth over the long haul. Whether the stock market is up, down, or treading water, you’ll continue to grow your nest egg.
2. Take a Long-Term Perspective
One of the biggest traps people fall into is “lifestyle creep,” the tendency to increase spending as income rises. Johnson points out that this phenomenon can undermine your ability to build wealth. “It’s difficult for many people to imagine their future self and give up that vacation or new car today in favor of saving for retirement,” Johnson explains.
Instead of upgrading your lifestyle when you get a raise, Johnson advises acting as if you never received one. “Continue living the same lifestyle and invest the difference,” he says. For instance, if you receive a $5,000 raise and invest that money at a 10% annual return, you’ll accumulate over $822,000 in 30 years. This strategy can turn modest income increases into long-term financial security.
3. Engage a Financial Advisor Early
You wouldn’t hesitate to see a doctor when you’re sick or a lawyer when you’re in legal trouble, so why would you handle complex financial matters on your own? Johnson advises seeking out a financial advisor early in life. “Without professional help, most people will struggle to accumulate significant savings,” he warns.
A financial advisor isn’t just for the wealthy. They can help you develop a savings plan, manage your investments, and navigate the complexities of retirement. Even after you’ve built your nest egg, an advisor can help you create a spending strategy in retirement, ensuring that your hard-earned savings last throughout your golden years.
4. Keep It Simple
When it comes to investing, simplicity is key. “In most areas of our life, we strive to be above average,” Johnson says. “But, in investing, earning average long-term stock market returns is a winning formula for building wealth.”
He recommends the “KISS” strategy—Keep It Simple, Stupid. For most people, the best approach is to invest in a low-fee, diversified equity index fund and contribute regularly. The stock market may rise and fall, but if you stick to a simple, consistent strategy, you’re likely to see long-term gains.
5. Manage Debt Wisely
Debt can be a double-edged sword. Kelly Ann Winget, founder and CEO of Alternative Wealth Partners, advises using debt strategically, understanding the terms, and managing it effectively. “Avoid accumulating unnecessary debt, especially high-interest debt,” she warns.
For those already burdened with debt, Winget recommends developing a repayment plan and considering debt consolidation to reduce interest costs. By managing debt effectively, you can free up more money to save and invest in your future.
6. Plan for Taxes
Tax planning is another critical piece of the financial puzzle. According to Winget, smart tax strategies can have a significant impact on your long-term financial health. “Consult a tax professional to optimize your financial structure and retain more of your income,” she says.
Tax laws can be complicated, but understanding deductions, credits, and other opportunities to reduce your tax liability is crucial. Regularly reviewing your tax situation with a professional can ensure you’re not leaving money on the table.
7. Increase Your Income
Finally, boosting your earning potential is one of the most direct ways to achieve financial success. Winget encourages seeking opportunities for career advancement, negotiating salary increases, and exploring additional income streams.
“Investing in your skills and pursuing new career paths can open doors to higher income,” she says. The more you earn, the more you can save and invest, allowing you to reach your financial goals faster.
Final Thoughts
Financial success is not an overnight achievement. It takes time, discipline, and the willingness to make sacrifices today for a more secure tomorrow. By automating your savings, sticking to a long-term investment plan, seeking professional advice, and managing debt and taxes wisely, you can create a roadmap for financial success. With patience and persistence, you’ll be well on your way to building lasting wealth and enjoying financial security throughout your life.
