Monthly Finance Message:

Seven Strategies For Financial Success

October 2007

Barbara O'Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers NJAES Cooperative Extension

Did you ever wonder why some people achieve their financial goals while others who earn the same amount of money (or more) live "paycheck to paycheck"? A number of recent books have explored factors associated with financial success and personal characteristics of millionaires. Below are seven recommended strategies to improve your "fiscal fitness" and achieve future financial goals:

  • Set Specific Goals - Put a date and price on each of your financial goals such as "save $6,000 for a daughter's wedding expenses in two years." Once you have estimated the total cost of a financial goal, break it down into smaller pieces, such as "save $3,000 a year during the next two years" and even smaller pieces, such as "save $250 per month" ($3,000 divided by 12).
  • Focus on Succeeding - Remember the old saying, "when there's a will, there's a way"? It is as applicable to personal finance as it is to other areas of life. It takes discipline and focus to postpone spending today for a goal that may be years, even decades, away. That's why having specific goals is so important. They provide an incentive to save and something tangible to strive for.
  • Live Below Your Means - There are four ways to "find" money to save for your future goals: sell assets (e.g., have a garage sale), increase income, reduce expenses, or do a little of each. Living below your means is an intentional process of spending less than you earn and saving the rest of your earnings, preferably through payroll deductions and direct deposit arrangements.
  • Automate Your Savings - Once you make up your mind to save, the next step is taking action to do so. The best way to save is to do it automatically through an employer 401(k) or 403(b) plan, credit union, or mutual fund automatic investment plan (AIP) that deducts periodic deposits from a bank savings or checking account. Check with your employer about automatic saving opportunities.
  • Borrow Carefully - Another key to financial success is keeping debt low and paying the least amount possible for borrowed money. When monthly debt payments exceed 15% to 20% of net (after-tax) income, many families experience financial difficulty. In addition, money spent on debt repayment is unavailable to invest. Even those who aren't having trouble paying bills may be paying more for credit than is necessary. Strategies to reduce credit costs include negotiating a lower interest rate from creditors, transferring outstanding balances to lower-rate credit cards, and adding the payments for repaid debts to remaining ones to pay off debt faster.
  • Maximize Tax Breaks - Tax breaks include tax deductions for contributions to tax-deferred employer retirement plans, tax-free municipal bonds, and the long-term capital gains tax rate on investments held more than a year. Other frequently-used tax breaks include the child, dependent care, and earned income tax credits and itemized deductions for state and local taxes, business expenses, and charitable contributions.
  • Develop Financial Resilience - Resilience is the ability to "bounce back" when bad things happen to good people. This includes unfortunate life events such as illness, unemployment, disability, and divorce. Financial resilience is increased with adequate savings, low household debt, current and in-demand employment skills, a social support system, and community resources, such as non-profit human service agencies that provide cash or other assistance.


  1. Rutgers
  2. Executive Dean of Agriculture and Natural Resources
  3. School of Environmental and Biological Sciences