The Top 10 Keys to Financial Success

If you’re one of those people who reads subject lines, but not emails, this post is for you. If you’re one of those people who reads Cliff Notes, but not literary masterpieces, this post is for you. If you’re like Joe Friday and want “Just the facts, ma’am," this post is for you. Here are my Top 10 Keys to Financial Success, David Letterman-style:

Credit: Stuart Miles

10. Ignore the noise- the world is not coming to an end (because if it is, what are you going to do?), a pyramid scheme still won’t work, and if everyone is talking about investing in “it,” you’re probably already too late

9. Have sufficient insurance and proper legal documents (Will, Power of Attorney, etc.) in place- make sure an unfortunate event or death won’t leave you or your family’s finances in a pile of ruin

8. Keep good and updated records- good documentation lets you analyze trends, prevents errors, and allows you to make sure you are staying on track to achieve your financial and life goals

7. Get out of long-term debt- don’t just make your car or house payments; throw as much extra towards the remaining balance(s) as you can

6. Invest prudently- time horizons and risk tolerances may change, but a long-term, diversified strategy is the best way to go

5. Maximize IRA contributions- a dollar saved now could be worth many more dollars years from now, so always make those annual contributions

4. Maximize 401(k) plan matching contributions- put in at least whatever it takes to maximize your employer’s match, but also put in as much as you can so you can retire sooner and in style

3. Stay out of long-term credit card debt- if you’ve spent more than you can pay off at the end of the month, you’ve likely spent too much

2. Have a sufficient rainy day fund- you need the greater of three to twelve months’ worth of living expenses or whatever magic number it takes for you to sleep comfortably

And the number one key to financial success in my book is...

1. Live BELOW your means- put in more than you take out (almost all the time)

I’ll keep working on my Jay Leno monologues, Conan O’Brien “State of the Shows,” and Jimmy Fallon thank you notes, but I thought a David Letterman-esque top ten might be short, sweet, and useful. Don't worry though, I won't quit my day job! 

-Tom