Americans essentially share the same financial goals, which, for the most part, can be boiled down to saving money, paying off debt and retiring comfortably. But with a sea of financial advice out there — as diverse as it is vast, and varying in accuracy — the how is where most people struggle in reaching those goals.
If only all of that information could be boiled down to a few simple, actionable steps that actually work.
Well, it looks as though 2015 is the year that wish will be granted. As a part of an annual competition to name the best personal finance expert, the most well-known and respected names in finance and entrepreneurship shared their advice for finding financial success next year.
“Americans can stop seeing themselves as victims — of the job market, Obamacare fallout, economic downturns, and the uncertain future of programs like Social Security and Medicare — and stop relying on someone else to ‘save’ them,” Kiyosaki said. “A shift in mindset (from ‘victim’ to ‘champ’) and a decision to put your talents, your intelligence and your strengths to work will set you up to take control of your life and your financial future.
“It starts with education, especially financial education … so make 2015 the year you champion your life and take control. Can’t find a job? Challenge yourself to create one for yourself. Want to start generating passive income and building assets? Do it! Find a mentor. Start a blog or podcast. Write an e-book. License your killer salsa recipe. Or join a network marketing company. You’re smart and creative and talented … so use those talents, learn more about money and business and investing, and champion — and change — your life in 2015.
“It’s your choice. Will you keep letting yourself fall victim to life’s curve balls? Or will you hit it out of the park by putting the power of financial education behind every swing you take in your game of life?”
“Give yourself a raise in 2015. This might mean mustering up the nerve to ask your boss for a pay increase, starting a side business, or increasing your billing if you already have your own company. Then make sure you’re saving at least 5 percent of your total income!”
Tiffany Aliche, AKA The Budgetnista
“The number one thing Americans can do to set themselves apart in 2015 is to work toward specific financial goals with an accountability partner. I developed the LIVE RICHER Challenge to help 10,000 women work together to master their money in the new year. Money management is a team sport, and in 2015, thousands of women will be able to change their financial lives for free during the LIVE RICHER Challenge.”
Jeanette Pavini (Coupons.com)
“Knowledge is power!” Pavini said. “And 2015 is the year to create change and become empowered! Over the years, there has been a common thread in hundreds of the letters I have received from viewers and readers. These consumer concerns have had a great influence on the stories I’ve done. For most people, it’s not a lack of wanting to improve their financial situations, it’s a lack of know-how. They become so overwhelmed and confused by the endless number of the options and resources available. Consumers feel as if they are never going to dig out of the hole, so they become discouraged and simply give up.
“The No. 1 thing people can do to set themselves up for financial success in 2015 is to go back to basics and to not allow it to become complicated. It all comes down to spending less and saving more. But that’s where the confusion comes in; there are hundreds of ways you can do just that. The trick is finding the ways that work for you. Consumers should be aware that it’s not just the big savings that matter. Change your mindset and realize that no savings is too small, they all add up. Educate yourself to really understand where you are spending your money. Have a budget that includes all of your expenses. Write it out. Know it inside and out. Learn what areas in your budget you actually have control over: groceries, entertainment, personal care. Have a plan and keep it simple. And don’t feel defeated when it comes to finances, see every penny saved as a small victory. Don’t feel overwhelmed, see every challenge as an opportunity to create change.
“Make 2015 the year you feel empowered to take control of your financial life. Let this be the year that you create a healthy and happy relationship with your money!”
“Be intentional with your money. If you’re going to win with money, you have to be intentional. That means creating a budget so you know where your money is going. This will help you avoid debt, pay off existing debt and save for the future.”
Sharon Epperson (CNBC)
“One of the best things you can do in 2015 to set yourself up for financial success in the future is to be strategic with your savings. Save as much money as you can in a Roth IRA,” Epperson said. “If an emergency arises, you can withdraw your contributions at any time without incurring penalties or fees. It’s also a great way to save for retirement. You could be in a higher or lower tax bracket when you’re in your 60s, who knows? With a Roth IRA, after age 59 1/2, you’ll generally be able to withdraw money tax-free. If you qualify, you could save up to $5,500 in a Roth IRA in 2015 — or $6,500 if you’re 50 or older. Contribution limits will be the same as this year. You have until April 15 to make contributions for the 2014 tax year, too. Check out the income limits at IRS.gov to find out if you’re eligible.”
And there’s another type of Roth account for retirement savings too.
“You can stash a lot more cash in a Roth 401(k) — and there are no income limits,” Epperson explained. “If your job has this type of retirement plan — and the majority of large employers are expected to offer a Roth 401(k) option in 2015 — you can contribute up to $18,000 next year (or $23,000 if you’re 50 or older). Unlike a traditional IRA or 401(k), contributions to Roth accounts won’t reduce your taxable income. But your overall tax savings (tax-free withdrawals!) will likely be much greater when you retire.”
Ramsey’s advice is simple and remains the same every year: “Get out of debt,” his team told GOBankingRates.
“Set goals. This isn’t novel advice, but many Americans don’t follow it. They might have a vague idea what they want: enough money to buy a house, send their kids to college or retire by the age of 65. But they haven’t set actual goals and figured out the steps needed to achieve them.”
Huddleston pointed to a Consumer Federation of America survey that found two-thirds of household decision-makers didn’t have a comprehensive financial plan. “Without a plan, you can’t get ahead financially,” she said.
For those unsure of where to begin, Huddleston also provided some basic steps for setting financial goals, working toward them and staying on track.
The first step, she said, is prioritizing needs over wants:
“Start by figuring out what you need (most likely financial reserves to pay for emergencies, your kids’ college education or your retirement) and what you want (perhaps a remodeled kitchen or a European vacation). Your needs will take precedence over your wants, with short-term needs being the top priority. Then you can set goals to meet those needs — and fulfill your wants.”
Being specific and making a plan to achieve those goals is also important, Huddleston said. “To set yourself up for success, be as specific (and realistic) as possible when setting your financial goals.
“Let’s say you want to buy a house. Don’t give yourself the vague goal of saving up for a down payment. Instead, commit to saving, say, $250 a month, which you can achieve by cutting expenses. Transfer the money you save every month from your checking account to your savings account until you reach your desired down payment.”
Once specific and realistic goals are created, savers need to hold themselves accountable. “Put your goals in writing and track your progress to motivate you,” Huddleston advised.
“Become omnipresent,” Felber said. “Can you imagine how much financial success you would have if you, your brand and your company could be known everywhere all the time? Now is the time to push the needle and create 10 times the action around who you are and what you do. Creating that celebrity status, I am an expert in what I do, [you can] use this to start dominating your marketplace. These steps will help capture the attention of potential clients. A great example is Donald Trump or Mark Cuban. You may or may not like them, but you know who they are, as they both are well-known everywhere and dominate their respective areas.”
“Make 2015 the year that you choose to invest in your personal self-development and hop out of your comfort zone,” Torabi said. “Learn something new, travel, take risks and practice your negotiating skills.”
Investing in oneself is central for American workers to gain a much-needed edge in a job market that is going to become increasingly competitive, according to Torabi. Being proactive now is vital to ensuring your career, earnings and financial success in coming years.
“Over the next five years we’re going to see dramatic shifts in the job market and economy,” Torabi said. “… Rather than react to the changing times, plant some seeds now so that you can be proactive and stay in control of your career and remain competitive. This will mean investing in yourself.”
Torabi also listed three specific trends she expects to see in the next five years:
- “Sectors like health care and education will take off even further.”
- “Employers will hire fewer full-time workers and more contract employees.”
- “More women-owned businesses will flourish.”
With these big, sweeping changes ahead of American workers, those who invest in themselves now will gain the work experience and skills needed to stay ahead of the curve in coming years. That’s why Torabi encourages people to invest in their personal development and professional growth in 2015 and beyond.
In a recent blog post on her website, Orman cautioned readers that 2015 will likely see a spike in credit card rates.
“Next year could be even more expensive for anyone carrying credit card debt,” Orman said. Because of how the Prime Rate is tied to the Federal Funds rate, Orman cautions that now is the time to minimize credit card debt before interest rates rise.
“The time is always right to take control of your credit card debt. Now it is urgent as anyone with credit card debt in 2015 is likely to see their borrowing costs go up. Time to stand in your truth and get cracking on this important financial goal.”
“If you don’t invest in things you know, you’re just gambling,” Buffett told CNBC earlier this year. It’s advice he’s rarely strayed from, and the reason why tech, gold and airlines will never get his money (or, in the case of airlines, get his money again). As he wrote in his 2014 shareholders letter:
“You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick ‘no.’”