Ron Blue recently testified before a Senate subcommittee conducting hearings on “Solutions for a New Era: Jobs and Families.” Mr. Blue was appearing based on his solid reputation of financial expertise.
A Senator asked him what the average American family should do in the current economy. Ron Blue said that the American family could benefit from following a four-part financial plan:
- Think long-term with goals and investing
- Spend less than you earn
- Maintain liquidity (or emergency savings)
- Minimize the use of debt
Think Long Term: The longer term your perspective, the better financial decisions you will make.
Spend Less Than You Earn: You need to know what you are earning, what you are spending, have a plan and monitor it. Over the long term, this will contribute to financial success.
Maintain Emergency Savings: A reserve will help you ride out the surprises of life and avoid debt.
Minimize and Eliminate Debt: Debt may allow you to have more now, but it reduces your ability to have more in the future. Debt is an obligation on your future income, and because of compounding, it may represent the single most important factor influencing your future financial success.
These four principles work in concert. Together, they represent a formula for financial success.
These principles are so timely to today’s economic climate. Perhaps because they are timeless. They are by no means new; they trace back for thousands of years.
The principles have endured the test of time. They are independent of the economy - recession or boom. They are insensitive to oil prices and the real estate market. Many rich people, and likely many more poor people, can attest to them.
Those that have followed this path in recent years are comfortably surviving - some thriving - in the economic concerns of today. If you have been following them, continue. You will continue to thrive.
If you are in crisis, there is no better time to start then now. You cannot establish a strong financial foundation without them. They will lead you out of your crisis, and help you prevent them in the future.
Note - reference source “Surviving Financial Meltdown” by Ron Blue and Jeremy White.