The one constant that everyone in the world will in counter is what to do with money? Some will have plenty, some will have not enough and all will have something to do with money. In an ideal world, there is enough to satisfy your basic needs and have investments. If you think about America, one of the richest countries in the world and hear 40% of Americans do not have an extra $400 in an emergency account, because they are living paycheck to paycheck, you can either question the system or look for guidelines to ensure you are never in that situation.

The writer belongs to Toastmasters club and one of the speakers recently heard from was a financial planner with over 30 years in the business. He caters to people in the $5 million in assets plus group, but he had his start working with average folks. His name is Tomas Ohannessian and his email is tomasglobal@yahoo.com. His 5 steps to building a strong foundation are:

1. Mind Blueprint – Tomas studied architecture as a student but moved to financial services as a profession. As an architecture you need to start with a strong foundation and then build the walls and roof to last your lifetime. The foundation includes you, spouse and family and support systems.
2. Living within your Means – there is a book called the millionaire next door, many people are young enough that a million dollars meant living in the best part of town and having money in the bank. However, the reality is where you live often dictates the typical of lifestyle you live. If you live in an area where your neighbors go away for vacations twice a year, send their kids to private school and drive the latest vehicles, you will tend to do some or part of the same thing. If you live in a different area, you might go on vacations once a year, send your kids to public school and drive an older vehicle because you like it. One area will be more expensive than the other because we are human and there is an element of “keeping up with the Jones” or doing what your friends do in your life. Try to live within the income you receive.
3. Understand Credit – after you start working the banks will offer your credit in mortgages, credit cards and car loans. Depending on what you do, you may be offered other types of credit – lines of credit, investment loans, etc. Some of the credit is wonderful, some of it is expensive. You need to know the difference and learn how credit works for you. You need to understand compound interest.
4. Invest in Yourself – everyone needs savings and money in the bank to do something, what you wish to do is up to you. One of the best methods is at your financial institution start putting money in a fund whether you start at $10, $50, $100 a month or paycheck, you need to start. The compound interest will work for you. It feels easier as the fund becomes larger. The number can be 1% up to 30% of your after tax income as the nike ads say Just Do It.
5. Autopilot – ensure the payments are regular they automatically go out of your account or you do not have that to live your everyday life with. The money is for piece of mind, the future, to allow compound interest work for you. At some point when you need it, it is there.

If you do the above you will be in the 60% group which has savings and more financial choices. It will seem hard at first, but learning about compound interest will allow you to many choices and eventually from a financial perspective that is what life is about.

Linking to dividend paying stocks, one of the reasons to invest in dividend paying stocks is dividends are paid to you and then you have choices of what to do with the money. Do you buy more of the same? invest in something else? use the money for other things? the important issue is having the choice.

There are more questions than answers, till the next time – to raising questions.