How to Be A Little Bit Smarter About Your Finances
There’s so much uncertainty looming in the financial sector that it’s crucial to learn how to be smart with your money. You should never rule out the possibility of losing your job, getting injured and being unable to work, or losing your ability to meet your financial obligations.
Even if you’ll like to assume that you’ll never face those unfortunate circumstances, it can happen to the best of us. Your advance preparation will determine how to respond when faced with a loss of income. You must be prepared in case financial hardship comes knocking at your door. And even if it doesn’t, it’s always advantageous to have a financial safety net as a result of being money smart.
Pay Off Debt and Stay Out of Debt
One of the best ways to ensure that you have a bright financial future is to pay off all your debt. Start with your most expensive debt – those credit cards and loans with the highest interest rates. With your debts paid off, you can then focus on paying down your mortgage. An easy way to tackle that substantial financial obligation is to split your monthly payment in half and pay bi-weekly instead of monthly. Pay a little extra with each payment if you can. The extra payments will remove years from your mortgage and save thousands of dollars on the interest charges.
Set Savings Goals
It’s crucial that you save money for the future. Start by setting a goal and saving money to meet that goal. Without solid savings, you’ll have to rely on credit or family and friends to get by when the going gets tough. You might even be forced to work through your retirement years to supplement your pension. Set up a savings plan where you deposit money on a regular schedule into a Tax Free Savings Account.
It’s never too early to begin planning for your retirement. Work out how much money you’ll need to retire comfortably and start saving with that goal in mind. This is money that you can also use as a safety net if you lose your job.
As your assets grow, it’s crucial to write a will to outline who will benefit from your assets when you die. Your will stipulates who will benefit from all your hard work and sound financial planning.
Get Life Insurance
If you don’t have life insurance, or think you may be underinsured, there’s no better time like the present to review your life insurance needs. Your coverage should be at least 7-10 times your salary. This will ensure that your family will be able to keep up with financial demands when you’re no longer there to provide for them.
While you can use that suggestion as a rule of thumb, your insurance agent at Wealth Smart will recommend coverage based on your level of debt, the amount of money you want to leave for your dependents, and charitable contributions you’d like to make.
Stop procrastinating on money matters. Take control of your finances now to ensure that your future is financially sound.
Helen Akin is a therapist. She frequently writes about the problems that plague most of her clients on family and household blogs.
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Category: Financial Planning
