Even if you’re in your early 20’s, or you’re entering your 50’s, it’s never too late or early to start investing in your financial future. We all want to be able to stop working one day and relax, and focus on what we want to do. Starting to save for your future requires some self-discipline, and know-how.
So we’ve included a list below of 7 smart things you can do to secure your financial future.
Feed the piggy bank
In the non-literal sense, putting your money into a “piggy bank” or savings account seems like an obvious way to start saving money. How much you set aside is going to be dependant on your current financial situation. You can aggressively work towards meeting your future financial goals, but you want to make sure that you’re able to live on the appropriated income you’ve given yourself. Set a budget, and a financial goal, and just work at it. It’s as easy as that.
A retirement account that works for you
One account that you can use to initiate your savings as you move forward with your financial plan is an IRA or an individual retirement account. It’s an account that will allow you to choose investment options that may not be accessible through alternative accounts. These types of accounts have larger tax breaks (and we all hate taxes). The professionals at http://www.irainvesting.com/ explains how these accounts provide you more freedom. It will let you choose to have your financial backed by metals that tend to appreciate value over time such as gold. Unless you want to pay a high penalty, you’re generally only allowed to take out the funds penalty-free when you’re of retirement age.
Make sure everyone is looked after
If you or your spouse is the main income earner for the household, you should look into life insurance if you don’t already have it. Having an insurance policy that will circumvent the deficit associated with the loss of one income earner is a big safeguard against a financial crisis in the future. Speak with your partner and find out what policy is best for both of you.
Pinch your pennies
Are you finding it difficult to find money in the budget to save? Go over a list of your expenses by yourself or your partner and make a list of the costs you have in a month. Find out where the money is getting spent and if you can cut back on a few things. This might even change some unhealthy habits that you have, after I quit smoking I suddenly had an extra 400$ a month to play around with and that on its own is enough to set aside for retirement.
Stocks that pay you
If you’re going to invest in stocks you should look into stocks that pay dividends. These are stocks that pay out a percentage of their worth per month. You can choose to re-invest this payout into purchasing more stock while you’re increasing your portfolio and then switch to a dividend payout scheme once you decide to retire. A portfolio with 425, 000$ invested with an average dividend yield of 3.5% will net you an extra 14, 800$ per year to look after your financial needs.
Location that has a lower budget
Local economies will play a huge role in the amount of finances expended. If you’re living somewhere with a higher than average rent/sales tax, you could look into finding a location that suits a lower budget. Before deciding where you want to retire look at the average expenses associated with that region, you’ll be able to make your money go further this way.
Keep Your “Head in the game”
Life expenses pop up, they do. You’re going to be tempted to use your savings in order to combat some of the expenses that suddenly arise during emergencies (or you just want a new car). Budget accordingly so you have both an emergency fund as well as a savings fund. Decide what amount your emergency fund should be capped at in order to combat the difficulties that come around in life. Having a nest egg is essential, but you don’t want it to impede your ability to retire.
It might seem like crunching pennies for the first few months, and budgeting can be uncomfortable, but after some time you’ll pick up the good habits of saving for your future effectively. Set up a budget, and figure out how much you can set aside to put in your virtual “piggy bank”, understand the tax benefits and freedoms an IRA can offer, and have a plan for the worst case scenario with life insurance. Looking at local economies where you want to retire, and having a stock portfolio with lots of dividends doesn’t hurt either. Keep plugging away at those savings and with a few good habits you won’t need to worry about enjoying your retirement.
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