Being successful with money only takes 5 steps — but you have to keep doing them
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Getting your money in order doesn't have to be a pain.
"There are really only five things you have to do in order to have a successful life," financial editor of NBC's "Today Show" Jean Chatzky told Business Insider in a Facebook Live interview, "but you have to do them over and over again."
Chatzky, who is also a senior editor at The Balance and the author of several books including, most recently "Age Proof," with Michael F. Roizen, outlined those five steps for Business Insider:
1. 'You have to make a decent living'
"You have to have money coming in from somewhere," said Chatzky. "'Decent' doesn't mean excessive, by the way. There's a lot of research that shows once you are able to live comfortably, more than that won't make you more happy."
For many people, earning a decent living is easier said than done, but not everyone needs to have seven separate income streams. To manage your money, to stay out of debt, and to build wealth, you need to have something coming in, but it doesn't have to be extravagant.
Even among higher earners, research like the oft-cited study out of Princeton in 2010 found after about $75,000 a year for a household (later adjusted to about $83,000 for inflation) people's happiness leveled off.
2. You have to live within your means
"You have to spend less than you make on a consistent basis," said Chatzky. "A lot of people have trouble there."
One of the best ways to make sure you're doing this is to start tracking your spending — simply watching where your money goes for a few months, before making any changes to how much or where you spend. You can do it automatically through an app like Mint or You Need a Budget, or you can get more granular with a spreadsheet.
3. You have to save
"You have to take what you're not spending and put it away, first in savings and then in investments so it can work just as hard for you as you are working for yourself," Chatzky said.
Savings take many forms. For instance:
- An emergency fund — about six months' worth of living expenses stored somewhere liquid (like a high-yield online savings account or money market account)
- Retirement savings — an employer-sponsored 401(k) and/or a personal Roth or Traditional IRA, all of which are tax-advantaged investment accounts created specifically to save money for retirement
- College savings — You can establish a state-sponsored 529 plan, which is also tax-advantaged and invested, as soon as your child is born.
- General investments — Despite hot stocks and companies making headlines, investing legends like Warren Buffett and Jack Bogle generally recommend a much simpler approach: putting money in low-fee index funds, and leaving it alone for decades at a time.
4. You have to think ahead
"You have to protect this whole financial world that you're building with both an estate plan like a basic will and other documents as well as the proper insurance coverage so that no disaster can take it all away from you," Chatzky said.
If you're curious, here's the insurance you should have at every age.
5. You have to give back
"You have to give back in some way that is meaningful to you, because that gives the human psyche a really great boost," Chatzky said.
Remember that this doesn't have to be financially — your time is valuable, too.
• How to vote tactically in the June 8 general election, by constituency
• Everything you need to know about Gal Gadot, the badass actress who stars in 'Wonder Woman'
• I've studied happiness for years — here are the 12 best pieces of advice I'm giving my daughter
Read the original article on Business Insider UK. © 2015. Follow Business Insider UK on Twitter.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments