Financial planning is important because you need to know where your money goes. When you don’t pay attention to your purchases or your expenses, you’ll have a difficult time financially planning for your future. Below are some great tips to help anyone become more financially stable.
- Identify Needs versus Wants
The earlier you are able to recognize your needs versus your wants, the more financially stable you will be. Marketers are very smart and use emotional components for selling their products and services. You need to learn how to say no to things you don’t need.
- Auto-Deduct From Checking
It is important to always be growing your savings. Most people have a difficult time accomplishing this. Set up an automatic deduction from your checking account for a specific amount to be transferred to your savings account. Not only will your savings grow without any effort, but the lack of funds in your checking account will make it easier for you to say no when making purchasing decisions.
- Create An Emergency Fund
A huge factor in financial stability is having an emergency fund to count on when you need it. Experts recommend having at least three to six months of income saved for a financial emergency such as losing your job or a medical bill that needs paid. If you don’t have an emergency fund saved up, you may end up having to rely on credit cards or loans with high interest rates.
- Buy or Sell Annuities
Annuities are contracts people take out with insurance providers to help increase their income when they retire. People buy annuities for many reasons such as for receiving periodic payments after retirement, having death benefits for a loved or as a tax-deferred growth investment. If you need money before you retire, you can sell all or a portion of your annuities for cash. Many reputable companies will buy your annuity payments from you when you need the money before retirement.
- Keep Debts Low
Financial stability is dependent on keeping your debts low. If you have high interest credit cards and loans, consider paying those off as soon as possible. You will save money on interest and fees and may see an increase in your credit rating.
- Invest In Future
Extra money should be invested in a retirement plan. The earlier you start planning for retirement, the more money you are likely to have. If your company offers a 401k, work your way up to paying the maximum your company will match. If your company doesn’t have a retirement plan, consider opening a retirement fund at your banking institution.