Ten keys to financial success

1. Action

The worst thing you can do is nothing. The sooner you start saving and investing your money in a well managed program, the sooner it starts working for you.

2. Planning

People do not plan to fail, they fail to plan. In fact, most people spend more time planning a vacation than they do planning their financial future.

3. Use the time value of money

Time really is money! An investment of merely $1,000 a year growing at 12% for 20 years becomes over $72,000. This is called "compounding" and the sooner you start taking advantage of it, the less you need to invest to reach your goal.

4. Account for inflation

Inflation has the opposite effect of compounding. It devalues your money over a period of time. Thus, $100,000 can be reduced to the purchasing equivalent of only $60,716 in just 10 years at 5% inflation. You need financial vehicles to help you keep pace with or outperform inflation.

5. Tax plan

Taxes can take their toll on your earnings. But taxes can often be substantially reduced through effective tax planning methods. Look into available tax-advantaged strategies.

6. Make good investment choices

Everyone invests differently, but there are two rules of thumb that everyone should follow: (1) diversify your investment portfolio, and (2) don't take unnecessary investment risks.

7. Buy adequate protection

Life is a risky business, and management of that risk is crucial. Life, health, disability, auto, home, and other forms of insurance are needed to protect against catastrophic losses.

8. Practice disciplined spending

It is said that "when your outgo exceeds your income, your upkeep becomes your downfall." When you commit to a solid plan, your spending patterns will reflect your priorities.

9. Have realistic expectations

Smart financial planning takes patience. Speculation and reliance on "get-rich-quick" schemes will not produce the outcome you want.

10. Seek professional help

Nobody is expected to be an expert in everything. Just as you rely on medical experts for guidance on the care of your body, you need financial professionals to guide you on the care of your assets.

Barbara Bachelder, CFP® for Wealth by Design, LLC