It seems obvious that everyone wants to have a strong stable financial future. But wanting and getting are two different things. Fortunately (or unfortunately as the case may be) the decisions that we make early in life can affect how much wealth we develop later on. To take control of your financial future, here are a few simple steps that you can take to drastically increase your chances for success.
1) Build an Emergency Fund
It’s important to have an emergency fund on hand when unexpected expenses arise. Between medical bills and car repairs, it can be easy to have large costs that you’re not prepared to pay. But the difference between an “Emergency” and an inconvenience is whether you have the money to pay for it. Make it a point to save 1 month’s expenses to cover unexpected bills that crop up. You need to replenish the funds after each use instead of resorting to credit cards (or worse yet payday loans). This will save you money in the long run by eliminating interest charges. The key is to build the emergency fund brick by brick. Adding a little to it each paycheck without fail.
2) Debt is Like a Vampire
Debt is the vampire of those seeking financial stability, since high interest rates suck the life out of your savings. Most people don’t realize how much money they lose to interest payments. They simply accumulate more and more debt and are often unaware of how much they’ve acquired over the years. Slay the debt vampire… pay off all debts as soon as possible. This will save you thousands of dollars in interest payments, while also increasing your credit score. Although, a high credit score will allow you to borrow at better rates in the future, by that point you will be smart enough to only use it when absolutely necessary .
3) Plan Your Finances
There is an old saying, “Failure to Plan is Planning to Fail”. This applies doubly to planning your finances. For assistance in planning you can use professionals or financial planning software like Wealth Trace. When you are just getting started software is an effective tool to help you plan for retirement and secure your future. Software can offer you the guidance to determine how much you need to begin saving and investing now to reach your retirement goals. It’s a great way to help you take control of your finances and make the financial changes you need.
4)Rely on Cash
If you are having trouble managing your debt and using your credit cards responsibly (i.e. paying off the full balance every month), stick to using cash. This is an effective way to prevent overspending when buying groceries or shopping for clothes. Studies show that using cash makes consumers more aware of how much they’re really spending with each transaction instead of relying on debit or credit cards. Once you master the habit of not using debt and paying 100% of your bills every month you can tap into the benefits of using a credit card to get extra perks.
5) Set Specific Goals
Make it a point to set specific savings and investing goals to prepare for your future. This includes paying off mortgage loans, saving for your children’s college, and eliminating your credit card debt. Setting goals each year will increase your chances of success and will allow you to remain focused on the future.
Instead of allowing your finances to control you, you can take practical steps that will increase your financial standing and will allow you to thrive over time. By making the right decisions with your money, it’ll be easier to retire early and enjoy the fruits of your labor instead of being buried by debt having to work until the day you die.