Increasing financial assets can be a challenge for anyone, whether the goal is simply to make ends meet or to save more for retirement. A few basic tips can help most people spend less and save more to use for buying a home, taking early retirement or just putting together a rainy day fund. Establishing and sticking to a budget, setting aside a certain amount of each paycheck and reviewing current assets can help a person maximize his or her investment earnings potential. Making sound investment decisions is crucial to securing a family’s future financial security.
The first step to increasing financial assets is finding money to invest each month. Most families should start by reviewing their current spending habits and establishing a budget for both necessities and recreational spending. Creating a budget can help a person see where his or her income is going and what kinds of spending can be reduced. Some people find it helpful to break their budget down by annual, monthly and weekly spending to get a better idea of their overall spending patterns.
Once a family has established a budget, members can move toward investing some of their money each month. Investing even a small amount of money on a regular basis can help a family save toward a financial goal or deal with a future emergency. Some employers will match their employees' investments in retirement funds or company stock plans. Others will need to find appropriate financial instruments to fit their situation. Financial windfalls such as inheritances, gambling income or legal judgments are another good source of money for investments and should not be wasted on frivolous spending.
There are many types of financial assets available through banks, credit unions and brokerages. Beginning investors may wish to start by putting some money in an individual retirement account (IRA), 401k plan or savings bonds each year. These types of investments will grow slowly over time and be available to help pay for retirement. After securing retirement income, a family also will need to establish some savings for shorter-term goals. Many people choose to put short-term savings in relatively secure assets such as certificates of deposit (CDs), money market accounts and interest-bearing savings accounts.
Investors who feel they need greater returns or have large enough portfolios to take more risks may invest in stocks, bonds or mutual funds. While these financial assets will usually generate more wealth than more secure instruments, investors can lose part or all of their money if a company goes out of business or a bond goes into default. Many investors try to balance the risk with a mix of safe, low-interest assets and riskier but potentially more profitable stocks. There are many books, websites and consultants available to help families make smart financial decisions and increase their financial security.