If you truly want to empower your financial future and ensure a comfortable retirement, you have to begin by planning ahead for your finances. The old saying, “failing to plan is planning to fail,” definitely applies to your finances. Multiple studies, including the “marshmallow test,” have shown that those who take a long-term view, plan ahead, and are willing to delay gratification will ultimately become more successful than those who live for the moment and don’t plan ahead.
Rather than merely making do with enough funds to live or spending every cent you make, consider ways to increase your earnings and savings so that you can enjoy a comfortable quality of life as you get older. Here are some suggestions to help you prepare for the future. Although this video is dated, it has some excellent advice on setting and attaining financial goals. Because just setting goals is not enough, you have to attain them as well, which requires dedication and course correction along the way.
Plan for Adequate Savings
One important financial goal is to have enough savings set aside to cover emergency needs and long-term objectives. Even though the interest rate may be low, it pays to create an emergency fund. Having the money available for unexpected expenses transforms a household emergency into a mere inconvenience.
Some financial advisers recommend having enough savings to cover three to six months of monthly expenses. This can help you recover if your primary income source ends abruptly. But any amount of savings will help in a pinch. Long-term savings can accrue through investments or retirement accounts that pay more interest. However, you will likely have to pay a fee if you withdraw from these accounts.
Reduce Non-Essential Spending
Go over your monthly spending budget to see where you can cut costs. For example, you might want to cut unnecessary snacks from the grocery budget or drop the coffee shop routine to brew your own beverages at home. Reduce your utility use by adjusting the thermostat a couple of degrees warmer or cooler each season to avoid high costs. Browse thrift stores for used furniture and second-hand clothes. There are many ways to cut costs while enjoying a comfortable lifestyle.
Pay Off Consumer Debt
Another popular goal for many is eliminating credit card balances by paying them off. That goes hand-in-hand with reducing discretionary spending. Start with the smallest debt balance, and pay any extra money on the monthly payment to reduce the balance more quickly. When the smallest one is paid off, attack the next lowest balance, applying the payment for the account you just paid off to accelerate the payoff for the next one. You can also pay extra on the principal portion of your mortgage loan each month to pay it off sooner.
Consult a Wealth Management Adviser
Work with a wealth management professional to develop a plan for how to create and meet financial goals. They’ll talk to your plans for the future and help you identify the financial goals you’ll need for those plans.
The experts at Horan Financial say an advisor’s goal “is to help position their clients to grow, sustain and safeguard their wealth. Investment success is measured over time—not in a single trade. Economic, market, and investor changes all require continuous and prudent asset positioning with disciplined security selection.”
A good advisor can teach you how to use your money effectively and invest for the future to be ready for whatever life brings your way. Whatever your income and expenses, set reasonable financial goals now to build a better, stronger future. It won’t take long to start seeing results.
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