Oprah Winfrey's Formulas for Financial Success

Craig Lock

Title: Oprah Winfrey's Formulas for Financial Success Author: Craig Lock
Web Address: http://www.nzenterprise.com Additional Articles:http://www.bridgeniche.com/ebooks/Ebooks.htm Publishing Guidelines: Permission is granted to publish this article electronically or in print.

These thoughts are extracted from Oprah Winfrey's fine show, which I watch regularly (enough free advertising for her - she doesn't need it!). I've written this piece in point form for brevity.

Oprah Winfrey's Formulas for Financial Success

I believe that anyone can get out of debt. You should have between 3-6 months salary as a reserve fund, on which to live before you start investing. Put your savings into an emergency reserve fund - it should be in a savings account, rather than the stock market. However, be aware that there are usually penalties, when you need to take your money out.

The problem is many people give up, if they don't have it - like a "money diet". It's the way you CHOOSE to deal with money. See it as a means to an end, rather than as an end in itself - money is a commodity to help you meet your personal goals and responsibilities. Most of us are headed for financial trouble - at least 3/4 of people are not saving anything like enough money.

First, FIND OUT HOW MUCH YOU OWE. Do a budget of spending and saving. Become "financially fit" - watch how much you are spending. Don't use life assurance as kids education savings plans - rather use unit trusts for this purpose.

The biggest mistake most people make is thinking that they do not have enough money left to invest. "You don't have enough not to."

PAY YOURSELF FIRST. Send yourself a bill, for say 10% of your income each pay day. Make it one that you HAVE to pay - so you don't miss it. Write out an invoice to yourself for your own savings account. First should be your own retirement plan. SAVE at least 10% of your income - you deserve it. Keep it, but don't spend it. You can arrange to have these monies automatically deducted. Have money taken automatically out of a cheque to a savings account. It's a great step for kids after getting their first job.

How to cut your tax bill?:

Unit trusts (or managed funds) are great to grow money quickly and also to build over time. Expect approximately a 10% pa return over a long period.

HAVE A LIFE PLAN: Things like a will, insurance, etc. Doing this will ensure good financial health. "Don't forget the trees for the forest". Your retirement funding should come before your kids education (college)?? But it is best to work on both goals at the same time. Make your money management skills work for you. "Money goes where it is treated best." In the short term and especially these "rocky days", the stock market is a roller coaster ride - it's hard to project your financial needs/requirements into the future. "How much are we going to need in the future for the family's later years?"

Asset management: Studies show that you need money both in the stock market and in Fixed Interest investments - ie. build a BALANCED portfolio. Make it a priority to own your own home - that is a great compulsory savings plan.

Consolidate your bills into one loan, if you can get a lower interest loan... but most IMPORTANTLY, DON'T spend the savings.

YOU NEED WILLPOWER and DISCIPLINE TO SAVE YOUR HARD-EARNED MONEY.

Pension transfers ("roll overs"):

If you leave a company, get the firm to transfer your pension fund directly - called a "trustee transfer" or "roll-over". Try to get your employer to match your own contributions. It will create a most effective investment yield.

Pick out the area of your life causing the most trouble to you. The most common are:
* entertaining
* eating out
* clothing
and
* our beloved kids

Try to cut back on spending in these areas, where you can. Look for similar plans to save money: medical, insurance. It may be you don't need that big car, Reebok sneakers for the kids, designer clothes, etc. Teenagers!

PAY YOURSELF on time. Remember we treat our creditors better than we usually treat ourselves.

YOU NEED WILLPOWER and DISCIPLINE TO SAVE YOUR HARD-EARNED MONEY (repeated for emphasis).

Finally...and most importantly, achieving wealth, like health and happiness, starts in the mind. That's the way habits are formed. It all depends on your underlying beliefs about money. The way you start saving and investing your hard-earned money is vital here in developing great money management HABITS.

Craig Lock

About the writer:

Craig Lock has been involved in the personal finance field for too many years before becoming an author. (That's in the days, when he had a "proper job").

Craig's books are available at: http://www.nzenterprise.com/money/ http://www.novelty-gift.com/ and http://www.bridgeniche.com/CLOCK/zaniestbooks.htm

"The smallest quality bookstore in the world."

THIS ARTICLE MAY BE FREELY PUBLISHED.