retirement

7 steps to financial abundance

3. Minimize your taxes 

Use every legal method to reduce taxes. If you are married and your spouse has no earned income, you may be able to fund a "spousal IRA." With a spousal IRA, you may deduct an additional $5,000 (or $6,000 if your spouse is over age 50) from your income taxes in the 2008 tax year ($1,000 less in the 2007 tax year).

If you have children in college, take advantage of the federal government's HOPE Scholarship or Lifetime Learning credit programs. Both of these programs provide tax credits which reduce the income taxes you owe on a dollar-for-dollar basis. Education tax credits can reduce your tax bill by up to $2,000 annually to offset higher education costs.

Using appreciated stock for charitable giving can also reduce your taxes. You pay no taxes on the stock's appreciation and receive a charitable deduction of the stock's full value. Establishing a donor-advised charitable giving fund makes this easy to do.

Every dollar saved by reducing your taxes helps build your financial abundance.

4. Manage your investments 

Properly managing investments is critical if you want to remain in the land of financial plenty. If you manage your own investments, implement an asset allocation plan that allows you to sleep well at night. Low-cost index mutual funds provide superior long-term results for most investors.

If you use an investment adviser, investigate potential conflicts between how the adviser is compensated and your best interests. Such conflicts may occur when advisers earn commissions on products they sell. For more information, read Bankrate's article, " Finding a financial planner."

Don't confuse 'abundance' with 'wealth'
  • Wealth is not the same thing as financial abundance. To appreciate this, we need only to look at the biblical story of the Exodus. Pharaoh, one of the richest individuals in the world, lived with a sense of scarcity. He used Joseph to secure all of his country's food and land so that he would be prepared for the coming famine. He spent his life in fear of scarcity.

5. Protect your financial resources 

Fear of the unknown can produce a sense of scarcity. Proper insurance to protect your financial resources is important in keeping this fear at bay. Most people understand the need for health, life and property insurance.

Unfortunately, disability insurance is sometimes overlooked. A serious, long-term disability can destroy even the best financial plan.

To learn more, read Bankrate's article on " 5 insurance must-haves."

6. Control your personal finances 

Many things that impact our finances remain outside of our control -- the stock market, tax codes, the economy, negative world events. Things we cannot control increase the fear of scarcity.

By contrast, we may reduce our fear of scarcity by making the right choices about things we can control -- such as developing good spending habits and making saving for our family's future a priority.

With this control, we have significant power over personal finances. Once this power is recognized, fear of scarcity is diminished and a feeling of financial security begins to permeate our lives, leading toward financial abundance.

7. Have faith in continued abundance 

Overcoming the fear of scarcity requires faith in continued abundance.

By implementing the first six steps, you have done everything in your power to control financial abundance. However, faith that your abundance will continue is necessary to keep doubts and fears of the unknown and the uncontrollable future from becoming overwhelming.

Living in financial abundance requires you to control consumer-driven consumption, maximize and protect financial resources and nurture faith that abundance will continue.

If you can't take these steps by yourself, find a knowledgeable and trustworthy financial guide to help you with this journey.

Once you escape the fear of scarcity, you may find true serenity. When living in financial abundance, you may even decide to share more of your money with your favorite charitable organizations.

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