Financial Literacy - How to Prosper
investing
How to ruin your chances of prosperity

Prosperity and financial freedom are burdens. Where's the excitement in knowing you'll always have enough money to cover any contingency and pay all your bills? All that free time and security would be enough to bore anyone to tears.

To avoid that fate, most people can ruin their chances of prosperity simply by doing as little as possible: Show up at work, do just enough to stay employed and strive for mediocrity.

But for those who just can't seem to beat prosperity off with a stick, there are overt ways to foil long-term financial success.

4 ways to thwart prosperity
  • Don't set goals.
  • Dillydally.
  • Think inside the cubicle.
  • Invest in the hottest sectors.

Don't set goals

As they say, you can't reach your destination if you don't know where you're going.

The mantra preached by self-help gurus in every field, from weight loss to dog training, is to set clearly defined goals. The same is true for finance.

Whether your money goal is to pay down debts or become a billionaire, write it down and then figure out how to reach that milestone.

"First we need to define what prosperity means to each of us, meaning are we financially free? Or do we have no mortgage? Do we have money in the bank?" says Justin Krane, Certified Financial Planner and president of Krane Financial Solutions in Los Angeles.

"If someone says they want to retire, that is not as clear and vivid as, 'I want to be able to travel and gift money to my kids,'" he says.

Before you make wealth-building a priority in your life, set your goals.

Dillydally

Saving and investing is a mandatory part of building wealth. It may not make you a Maserati-driving, champagne-swilling magnate, but it plays a vital role in fostering good financial habits.

Think of it like establishing good grooming habits. Heidi Klum probably has a great skin care routine, and though you won't become a supermodel by following her example, you may end up with nice skin.

Saving and investing work best in the long run if you start early. To gum up your prosperity plans, take a few years off between 18 and 40.

Blame it on math and compounding interest.

"One of the lessons we try to teach young people is that the savings curve is not linear; it's geometric," says Jack Reutemann, Certified Financial Planner and president of Research Financial Strategies in Rockville, Md.

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"To save for retirement, if you wait until 35, you have to double the money you would have had to save if you started at 25," he says.

For instance, a 25-year-old would need to save $167 a month for 45 years to amass about $881,000, assuming an annualized 8 percent return.

Sadly, saving the same amount with an identical return for 35 years will get you just about $383,000.

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