Play Offense
I heard a phrase recently and really like the direction and proactive approach; “play offense with your money.” As opposed to defense, where you might be living paycheck to paycheck, chasing bills, amassing debt (and accumulating interest); offense is about staying ahead with your money, allowing you to make wise financial decisions now and into the future. Here are some tips on how to play offense with your money:
Have cash available. The first goal should be to set up an emergency savings account if you don’t already have one. After you have an adequate emergency savings account, pile extra savings on top. Having cash is the most important step towards playing offense and not ending up on defense!
Develop a budget. It doesn’t need to be extremely detailed, but the minimum goal should be to cover livings expenses and regular savings with some extra room built in for unexpected incidental expenses (so you don’t need to dip too far into your cash reserves).
Automatically save and invest. Put your retirement contributions on auto pilot and consider setting up automatic deposits to your savings vehicles as well. This takes the thought out of saving and investing each month and will help you stay disciplined.
Pay off debt. If you are coming from defense, you most likely have some debt that’s holding you back. As a motivator to continue tackling debt, I like the avalanche method for paying it off. This method pays off the smallest loan first, then the next smallest, and so on giving you wins along the way.
With extra money available on offense, consider your tolerance for investment risk (and therefore potential reward). If you now feel freer with your money, you might be able to take advantage of riskier investments that can possibly yield higher returns. This would not have been an option if you were still on defense, as you would not want to take undue investment risk and end up in jeopardy when the next bill is due.
Choose banks and credit cards that work for you. Shop around for rewards credit cards and/or bank accounts that might have perks or better fee structures that benefit your lifestyle. Also seek out a high interest savings account or money market fund for your extra cash. Instead of you paying interest and overdraft fees while on defense, the banks now reward you with interest and perks for playing offense!
Enjoy playing offense! I hope it helps you to better align your money with your values!