Personal Finance: How To Secure Your Financial Future in 6 Easy Steps.
Raise your hand if you want to take control of your financial security and have a hold of your personal finance.
Today, i’ll show you all you need to do today to so you can have a great financial stand tomorrow.
Because the thing is, nobody wants to be sitting in a pile of debt upon debt.
Wouldn’t it be great to have a hefty sum in savings a couple of years from now?
Imagine what it will be like, say 10 or 15 years from now, to have a considerable sum in emergency funds plus investment amount growing every day?
Let me guess you like the sound of that, correct?
Listen, it’s never too early to start saving to achieve financial security.
Time waits for no one, and five years from now is genuinely not that far away, and It is so easy to waste years of savings-related opportunities.
Don’t let this be you.
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- Legitimate work from home jobs that pay well
- 20 simple tips and tricks to save more money
So What Can You Do About It?
Believe it or not, it is easier to save a ton of money than you think.
Yes! i’ts true.
You can own half a million dollars or more. It is easier than you think.
But how?
According to MarketWatch.com, only saving $2,000 per year for seven years, a 15-year-old is capable of becoming a millionaire at the age of 65.
Even more surprising is that the same teenager doesn’t have to save another penny after the initial seven-year period if they invest the money properly. Amazing right?
Assuming you’re older than 15, here’s some additional information that may be of interest to you.
Note: This information is based on the fact that you start with a $10,000 investment and increase your portfolio by seven percent a year.
- At the age of 25, you are to put away approximately $300 per month until retirement age
- if you are 35 years old = approximately $775 per month until retirement age
- ·when you get to Age 45 = approximately $1,850 per month until retirement age
- Finally at Age 55 = approximately $5,700 per month until retirement age
Just looking at the massive difference between each ten-year increment, it’s easy to see why you need to start saving for the future as early as you possibly can.
By now, you may be wondering, Seriously, how do I achieve this?
So stick with me here, and I will be diving into some of the best ways to manage your money now and secure your financial future.
Also, at the end of this post, I’ll walk you through several simple tips to boost your income.
This will ultimately help you put away even more.
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Let’s get started.
1. Create a Budget
Creating (and sticking to) a reasonable budget is one of the first steps to becoming financially secure.
Yes, it’s still possible to save money without a budget.
But, you’ll typically find it much easier to save when you have at least a basic outline in place.
A budget is a vital foundation to have a good financial plan.
Now that’s the cool thing about budgeting.
It gives you a clear picture of exactly how much money you have and where it goes.
This is crucial because it is one of the first steps to save and make plans for the future.
Believe it or not, budgeting can simplify your income, thereby improving your life and making your financial decisions and debt payment easier.
But in my opinion, the best budgets are the ones that are not restrictive.
Your budget should not just be there to make you feel guilty for spending but should be flexible and suit your lifestyle.
Whether you prefer to stick to writing it out using a printable budget binder like this or using budget apps, making your own budget gives you in-depth knowledge of where your money is going to make better financial decisions reach your financial goals.
2.Track Your Spending Habits
It is a common mistake to skip tracking your income before putting together a budget.
But the fact is , budgeting and managing your personal finance is almost impossible to accomplish if you do not track your income.
In other words, You have to know where your money goes to get a handle on your current spending habits.
Once you can do that, it’s much simpler to create a money management plan that you can comfortably live with.
The simple truth is, if you don’t track your spending, you could quickly end up with a long list of things to buy or do with your money.
There is always something we want or think we need.
so, in other to budget and save successfully, you will need to have a clear picture of your spending habits.
Read: 20 Things you need to remove from your budget to save money today.
Simple steps to take to have a clear picture of your spending habits
- Write it down
- outline your spending
Now, let’s look into these in more details.
#Write It Down
The best way to start tracking expenses is to make a list of major categories. Include things like:
- Rent/mortgage payments (also homeowners insurance, general household upkeep, etc.)
- Medical insurance
- Utilities (trash pick-up, water, cell phone, electricity, etc.)
- Car expenses (gas, insurance, car loan, etc.)
- Groceries
- School expenses (school lunches, tuition, fees to play sports, etc.)
- Entertainment
- Personal needs
- Work-related expenses (dues, etc.)
- Credit cards
This is in no way a complete list. Everyone’s budget is going to be different.
However, it would help if you took the time to think about everything you’re required to pay for one month.
After doing this, proceed to place each entry under the proper category.
Next, figure out how much you spend on each category within that same 30-day period.
If you have any uncommon expenses, save time, and put them under “miscellaneous.” You can always go back and make adjustments later.
Whether you choose to tackle your budget using an app or the old-fashioned way (with pen and paper), it’s crucial to avoid cutting out expenses so much that you take all of the fun out of life.
Make sure to earmark money for things like entertainment and occasional splurges.
The thing is, If you don’t, chances are you’ll probably end up throwing your budget out the window in no time at all.
For example, if you love to eat out and do so quite frequently, the trick is not completely giving it up.
A better approach would be to plan to eat out once a week instead.
Another option you could try is to attempt to make the meals from your favorite restaurants right at home.
What’s the point, you ask? Well, when you make these dishes at home, you’ll typically save money nine times out of ten, and you dont feel deprived of that particular food craving.
This means more savings for your piggy bank! ( well, your bank account, you know what I mean)
#OutlineYour Spending
Once you’ve completed that, it’s time to figure out how much money you bring home after taxes.
If you don’t have enough money to cover everything listed, it’s time to make some changes.
But if you are unable to juggle things around to make it work, you may need to cut some stuff out of the budget,
Another option is to look into getting a side job to bring in more money.
Did you know that financial experts recommend that you save 10 percent of your income?
You could start by right off the top, placing your savings in an IRA or 401(k) for long-term savings.
Alternatively, if you prefer something more short term, think about a money market fund or a six-month certificate of deposit.
But more about that later.
Regardless of whichever option you choose, the best thing to do is put this money into savings, via direct deposit, each time you get paid.
The point here is if you don’t see it, you won’t miss it.
Makes sense, right?
Another way to look at this is that you are paying yourself and your future first in theory.
In addition to the point above, you should also plan to set 35% of your income aside for housing and utilities.
If your living situation allows you to get away with saving less than 35% for housing, even better.
Simply toss the extra into savings.
If applicable, you can put away another 10 percent of your income for a significant purchase such as a new vehicle or your child’s (or future child’s) education.
Depending on what it’s for, consider stashing it away in a college savings plan, like a 529 plan or a high interest-bearing account.
If you follow this scenario,
Then at this point, precisely 45% of your income will be left, which you can consider discretionary.
The plan is for this to cover anything else in your budget.
The choice is up to you.
3. Set Financial Goals
Setting financial goals for yourself now is a great way to take control of your personal finance and stay focused on saving money for the future.
Oddly enough, many people don’t find the motivation to start putting money away, simply because they’ve never considered what to do with it once they have it.
And by the time they get around to it, these savings can have so much potential that it makes it more challenging to decide what to do with the accumulated wealth.
But that’s not you.
Now make it happen; start making decisions today.
Here’s the thing, short-term goals can be easy to work out.
All you have to do is set your eyes on a goal by identifying things you would love to have.
Or things that you would love to invest in that are financially out of reach.
While these goals can be purely frivolous, the best short-term goals to set are ones that will help you achieve bigger goals by either helping your career or helping you make more money in the future.
For Example; Plan to save up for college courses, art supplies, voice lessons, or anything that might help you make more money in the future.
When it comes to long-term goals, The trick is to think about what sort of investments or purchases you would make if you suddenly won the lottery.
Would you want a garage filled with sports cars? Or perhaps bring your dream of running a business to life?
If so, these may be long-term financial goals to consider setting for yourself.
However, remember to keep your financial goals reasonable and avoid setting challenges for yourself that you may not accomplish.
Now that you have your long-term goals in place, The next thing will be to work out a financial plan that lets you achieve these goals as quickly as possible while still leaving you enough money to focus on your more immediate wants and needs.
You’ll know exactly how much to set aside each month and about how long it should take to reach your goal.
Depending on the situation, many people try to set aside as much as one-third of their income every month.
As much as this might be challenging to achieve, for what it’s worth, saving such a large percentage of your income will help you achieve more expensive financial goals easily.
4.Learn from every job or business opportunity as much as you can
Here’s the kicker, not ever one is going to end up doing what they love when they want it,
But it is vital to take every job seriously, regardless of much you’ll rather be doing something else.
The fact is, learning new skills and gaining experience is a sure way to achieve financial security and increases the chances of doing what you love.
5.Use Your Credit Wisely
Your credit report and credit score follow you throughout most of your life.
It’s crucial to do all you can to protect it.
Using your credit wisely is one of the best ways to make that happen because if you don’t have good credit, you’ll be less likely to be financially secure in the future.
Dont get carried away with overusing your credit cards.
Don’t do it.
You should know that you need to build credit if you’re just starting off or if you have a thin credit file.
Unfortunately, the only way to accomplish the task is to use credit.
At this point, you’ll undoubtedly have limited choices when it comes to credit card and loan offers.
But, building your credit is all about taking baby steps.
Retail store and gas cards are typically easy to obtain. If you belong to a credit union, a small personal loan might be a possibility.
The recommendation is that you make a small purchase on one or two credit cards per month.
Pay any balance in full when due because not only does this help to build your credit, it also shows potential creditors that you are a responsible and reasonable credit risk.
Throughout your lifetime, maintaining excellent credit will save you thousands of dollars in interest alone.
And remember, good credit is also the determining factor in buying a house and getting an excellent job in some cases.
So what are the mistakes you should avoid with your personal finance when building creditworthiness?
Mistakes to Avoid When Building Credit Worthiness:
- Never apply for too many accounts at once. Doing this indicates to the creditors that you need the money and trying to open whatever credit card you can get.
- Don’t max out your credit cards. Part of your credit score is determined by the amount of credit you have that isn’t in use.
- The lower the total balance of all of your cards combined, the better.
A word of caution, it is not recommended that you close a credit card account that you no longer use.
What that does is affects the age of your credit history.
You want a report that reflects the most extended credit history possible.
6.Consider Several Saving Options
Another noteworthy way to take control of your personal finance and save for your financial future is by considering several saving options .
For example,
- Emergency Fund
It is advisable to have an emergency fund of at least $1000.
If you feel that’s not an achievable amount because of your current income level, consider saving at least $500 for emergency purposes.
However, you should try as much as you can to use this money for only an actual emergency.
Dipping into the fund to pay for an unnecessary purchase or cover a monthly household expense completely defeats its purpose.
- U.S. Savings Bonds
U.S. savings bonds don’t get as much public recognition as they used to.
But, that doesn’t mean they’re not a viable method of savings.
They are the perfect choice for a significant purchase which you plan to make in the not-so-near future.
Because you agree to put the bonds in safekeeping (for a minimum period), they carry more interest than a traditional savings account.
- Mutual Funds (Low-Fee)
Circling back to the topic of long-term savings,
It’s time to mention the low-fee mutual fund.
This fund, which works well in conjunction with insured deposits you may have accumulated, comprises a mixture of managed stocks, bonds, and additional non-deposit investments that aren’t insured by the FDIC.
The downside of this type of fund is that you must assume the risk of possible loss if and when the economy takes a turn for the worse in exchange for a higher return rate.
- Health Savings Account
A health savings account or HSA is available to U.S taxpayers covered under a high-deductible healthcare plan.
The money deposited into this account is excluded from federal income tax when deposited.
If these funds aren’t used during the calendar year, they roll over to the next year and the following year for an indefinite period.
More and more employers are doing their part by stepping in and contributing to these employee savings accounts.
There is an annual limit for both single individuals and families. This limit typically increases a little bit every year.
Note: However, you will be unable to pay for a medication with the money in this account without a physician’s prescription.
Looking at this account individually, it may not seem like it has anything to do with saving for your financial future.
But, it would be best if you looked at it this way: over your lifetime, all of these little savings do add up.
- 529 Plan
A 529 plan is a financial plan that offers tax advantages and other incentives to people who are putting a child or grandchild through college.
A typical 529 plan’s earnings are not subject to state or federal tax when used to cover tuition, fees, and other beneficiary supplies.
You can name anyone as the beneficiary of a 529 plan, including yourself.
7.Take Advantage of Online Tools
Thankfully, today there are lots of free apps that help immensely with personal finance.
But here’s the problem, there are so many options available that it might be challenging to decide which service is the best.
No need to worry – here are two of the most popular choices available.
Mint.com
Mint.com is a free website that uses personal finance software to help track your transactions and give you a clear picture of your finances.
Mint links up with your bank accounts and credit cards to track the flow of money through them.
It reminds you to pay bills, recommends financial accounts with better interest rates, and even tell you your credit score.
Buxfer.com
Like Mint, Buxfer makes personal finance software available for free to the public.
While the basic version is available at no cost, many more advanced features are available for a monthly fee.
Buxfer offers more functionality than Mint.
8. Pay Back Student Loan Early
You’ve earned your degree. Congratulations are in order!
However, It’s never too early to start thinking about paying back your student loan, or is it?
You might be surprised to learn that there are both pros and cons to making payments before they’re due.
9. Stay Healthy
It is pretty obvious once you think about it.
Fewer trips to the doctor mean less money spent on co-pays, transportation, and prescription costs.
By keeping yourself healthy, you can save money to choose to add it your savings.
How To Save Money By Keeping Your Hospital Trips To a Minimum
- Maintain a healthy diet
- Get some excercise
- Dont skip Sleep
#Maintain a Healthy Diet
The foods that you eat have a profound effect on your wellbeing.
It’s simple to keep your body in top shape; you should aim to eat a balanced, nutrient-rich diet.
Of course, every person has different nutritional needs and preferences.
But, here are a few dietary guidelines you can follow to keep yourself feeling healthy.
Adding fruits and vegetables to any meal is a great way to include plenty of nutrients. Dark, leafy greens work well in many dishes and are great for energy and heart health.
Make sure you include a source of protein in your diet.
It doesn’t matter if you choose to get your protein from an animal or non-animal source; you must consume an adequate amount of protein every day.
Most adults need 40-60 grams of protein each day, which is as much as about four eggs or three cups of beans.
You may like : The pegan diet made easy( an ultimate guide)
Also, Your body needs water for every one of its processes.
Try to drink at least eight full water glasses a day and even more if it is a hot day or plan on doing a strenuous activity.
#Get Some Exercise
It is no news that engaging in even 30 mins a day of strength training or cardiovascular exercise keeps you feeling fit, strong, and healthy.
Try jogging, stretching, or lifting regularly.
All of the physical activity will leave your body feeling refreshed and full of energy, even if it does seem strenuous when you’re starting.
Not only will exercise save you money by keeping you out of the doctor’s office, but it could also become a form of entertainment, especially if you decide to engage in sports activities that you love.
#Don’t Skip Sleep
According to the U.S. Centers for Disease Control and Prevention, 30 percent of American adults aren’t getting enough sleep.
On average, adults need 7-8 hours of sleep each night, though many sleep for less than six.
Ensure that you’re getting enough sleep each night and that you are sleeping at a consistent time.
Yes, this may be difficult for a busy mom, but you can try to stick to a consistent sleep schedule.
This will help you get restful sleep each night and feel refreshed and energized throughout the next day.
Income-Boosting Tips
Increasing your income is a noteworthy personal finance move you need to take into consideration.
Collectively, there are hundreds of ways to boost someone’s income.
The truth is “Every little bit helps.”
Here are a few ways to boost your income.
- Rent out a room or garage. While sharing living space may not be an appealing option for everyone, you have the option of turning that empty room into a source of income.
- Here is some legitimate online work from home jobs options that pay very well.
- Make DIY crafts and sell from home: here are some ideas.
- ·Sell unused/unwanted items. Not only will this bring in some extra cash, but it will also free up some of your storage space.
- Take on a bit of overtime at work, if any extra hours are available.
- Start a home business; here are some low-cost home business ideas you can start right away.
10. Say Yes to Moonlighting
Getting a second (or third) job is an excellent way to save money for the future.
According to the Bureau of Labor Statistics, millions of individuals take on at least one extra job every year.
That, in itself, is proof that moonlighting works.
If you feel like you already spend too many hours away from home, consider looking for a remote position.
Things have changed in the past few years.
Legitimate work-from-home jobs are more plentiful than ever before.
Of course, there will always be scams to watch out for.
But, with proper research, you shouldn’t run into difficulty.
If you have customer service or computer skills, it may be easier to snag a part-time gig than you think.
Another option is to start your own mini business.
Do you have a hobby or interest that you especially enjoy? Nothing is stopping you from turning that passion into extra income.
Start thinking about possibilities today.
11. Take Part in a Savings challenge.
There are several savings challenges that you can take part in.
30 days, 52 weeks, 90 weeks etc.
Many people decide to start a savings challenge as a fun New Year’s resolution.
However, you can begin any week of the year and still end up with the same results… an extra $1,378 in your bank account? Not a bad idea.
This is how it works.
For example lets say we are taking part in a 52 week challenge.
The first week you start to save, you save $1. The second week, $2. The third week, $3. Repeat this the entire year, ending with a $52 deposit the last week of the challenge.
There are several variations to this; however, the aim is to help you save over a period of time by putting very little away each week.
If you have extra money, this challenge is something you can get a little bit creative with.
There’s absolutely no reason you can’t start with a higher deposit, on the first week.
Challenge your partner or another family member to see which of you can save the most.
Are you more of a visual person? This FREE printable savings chart is the best place to get started with saving.
It’s a great way to keep track of how much you saved and how close you are to the savings goals .
12. Save All of Your Change
It might sound silly to tell you that saving all of your pocket change actually helps secure a brighter financial future.
But the thing is, if you do so consistently, it works.
This would only work better, however, if you pay for a lot with cash.
If this is you, this easy method of saving is something to think about.
Why stop at nickles, dimes and quarters?
You could also aim to throw in a dollar or two now and then watch your savings accumulate.
Ka- Ching!
Final Thoughts: How to take control of your personal finance
When it comes to saving for the future or taking control of your financial security, the list could go on forever, trust me!
But I hope this gives you a place to start.
The bottom line is it is entirely up to you to decide the effort you want to put into your financial security.
Now go out there, and make it happen.
Ps: Dont forget to share this post with your friends.
