Originally published in the Knoxville News Sentinel
The Trust Company is celebrating its 30th year in 2017. It is hard to believe I started this company while in my 30s and, suddenly, it is 30 years later. The milestone makes me realize how quickly even larger chunks of time can pass.
Pay off credit card bills each month. Delay purchases if you can’t pay for it in one month
Be sure to maximize contributions to 401(K), profit sharing or other retirement options from the beginning of your career. Save from each paycheck starting as early as possible. A great goal is to save 12 percent of your income. Do realize that it may take several years to get to 12 percent, but it will pay off later in life
When there is extra money to spend, split it into three categories. This is a great application for tax refunds, bonuses or any side business/moonlighting you may do. The proportions that go to each category will vary by situation.
- Extra debt payment: Focus on higher interest rate items like credit cards and student loans first, and then move toward paying off the mortgage early.
- Save to save: A savings account for items that need to be purchased at some point, but aren’t necessarily luxury or fun items. For example, a new washer and dryer because yours is worn out. Having designated savings for these items will keep your budget in check, and allow you some flexibility for purchases without using a credit card.
- Save to spend: This is an account for luxury, fun money (i.e. trips, expensive items, purses, shoes, gadgets, gifts, etc.) or things you could do without. It is important to reward yourself throughout your financial journey, just not at the cost of your stability.
4. Be cautious of risk.
The closer you are to living debt-free, the better the opportunity to take risks. Less debt makes risks less risky. There is a time and a place to take calculated risks. However, they are not necessarily easy to stomach. Know your tolerance and consider others such as spouse and family.
Financial independence does not happen without planning. I encourage you to start planning if you have not, and to continue your path if you have.
The last 30 years have been a journey for me. I am proud of The Trust Company’s team of 67 professionals, and how we as a business help people realize their goals.
Sharon Pryse, chairman and founder of The Trust Company, may be reached at email@example.com.