Do These 12 Important Tasks for a Better Financial Future
12 Important Tasks for a Better Financial Future
I hadn't given my financial future any thought.Debt was my middle name.When Micah and I got married, we had over $50K in debt to owe back to various institutions.School. Car. Credit.It was bad.Enter stage right: Dave Ramsey. Everything changed.We don’t adhere to every single step through his Financial Peace University, but the steps we did implement were literally life changing. We were able to pay off ALL $50k in debt in under 3 years of marriage.If you have been trying to improve your financial situation for a long time, and don’t seem to get anywhere, you might want to complete a reality check and build long-term plans. You will need to consider the consequences of each financial decision, investment, and credit you take on and maximize your return on investment. From investing in your personal and professional development to making the most out of your net worth; there are several ways you can enhance your income for your retirement. Below you will find a list of some of the most important things to take care of to secure a solid financial future.
Save Up For Larger Investments
If you want to go on a cruise on your 50th (or any birthday for that matter), you might want to start saving early. Create a plan and make sure you set yourself saving targets. Instead of blowing your line of credit on luxuries, you might want to save on interest. If you save up, you will be able to earn credit on your money while you are putting more and more towards your funds.Whether it is a wedding, a holiday, or a new car you are saving for, you can make your money work for you, and not against you if you create a detailed saving plan.Allocate a budget for each expense, and work out how much you have to put away each month to achieve your goals. You will get a sense of achievement, and feel better about spending the money, knowing that you didn’t have to get into debt over the expense.
Get the Best Mortgage Deals
Most people tend to stick with the same mortgage deal for the rest of their lives, just because they don't feel like comparing different offers. If you think that mortgages are too complicated for you, why not get in touch with an expert and let them help you find a better deal.To make the most out of your finances, you should work towards reducing the interest on your home loan.There are two ways of doing this: getting a better interest rate from another provider, or reducing the term and paying more each month. Use a mortgage calculator to find out the total interest and fees charged on each deal. The higher the amount outstanding on your home loan is, the more interest you will have to pay, therefore, it makes perfect sense to save money by paying more in a shorter period of time.
Build Up Equity
Your property is likely to be the greatest asset you ever purchase, therefore, it is important that you look after it and maximize its value. Focus on the return on investment when doing renovations or remodeling projects.Focus on the current property trends, and make sure you add more value than you spend on your house. There are some property investments that can double the value of your house, such as adding a new room or creating a modern, open-plan kitchen.Whenever making a property related decision, you need to look at future trends in the area and make sure that the demand for similar properties is likely to remain steady or even increase.
It is important that you consolidate your credit accounts before you start saving for your retirement or larger expenses. It is easy to allow your debt to spiral out of control, but more challenging sorting out your different accounts.The easiest way of consolidating your debt is releasing equity of your home, but not everyone has this option. You might want to replace your existing credit card payments with one set fee and fixed-term personal loan that is much easier to manage.Whenever you get a bonus, your tax return, or added income, you should pay off the smallest debt first. Dave Ramsey calls this the snowball method. Once you kick the smallest debt to the curb, you move onto the next one etc. It’s what we did and it was a boost of confidence when we said “sayonara!” to that first debt.
Look After Your Kids’ Future
It is crucial that you start saving up for your kids’ future once your debt is paid off. When you save for them, you’ll be able to teach them how to spend their money wisely and get them started off on the right foot for a bright financial future.As soon as your kids are in school, you can set them up with a savings account and contribute whatever you can each month. By the time they need the money for starting their own life, going to college, or getting married, they will have a capital to get started with.[bctt tweet="You'll never regret being wise with your money." username="pursuesimplejoy"]This will teach them independence and have a better appreciation of money and how to save and spend. Make it clear to your children that they will be responsible for investing their own money once they reach adulthood.
If you want a better financial future, you need to take budgeting seriously. You will need to eliminate every expense that is unnecessary and make the most out of your assets.If your mortgage goes up, for example, you will need to find a way of supplementing your income. If you need to reduce your working hours, you might decide to rent out a room in your home to cover your expenses and avoid getting into bad debt. You need to regularly review your budget to make sure that it still suits your needs and personal circumstances. This will allow you to make positive changes that will serve your financial future health.
Set Long-Term Goals
Living from one month to the next will not help your financial future. You need to create a clear plan about where you want to be ten or twenty years from now and create achievable goals.Whether you would like to build your property portfolio and downsize after you have retired or buy a property abroad, you need to see the steps you need to take to achieve these goals.Create a 2-year plan, a 5- year plan, and one for retirement, so you can have landmarks to shoot for.[bctt tweet="Setting financial long-term goals will provide the motivation you need to create a better financial future... TODAY." username="pursuesimplejoy"]
Maintain Your Credit Rating
To get a better chance of moving up on the property level and making the most out of your investments, you might want to keep a close eye on your credit rating. You might want to avoid any form of credit, but this alone will not give you a good score.It's important that you have some kind of credit in your name that you keep on paying back over time, but if you spend beyond your means, you will seem like an irresponsible person and will get a higher interest rate on your credit accounts. Keep some credit accounts open, but manage them well to help your financial future.
Track Your Expenses
To make sure you are not spending too much, you might want to keep track of your regular expenses. Electricity and heating companies, as well as mortgage providers often raise their prices without any particular reason, hoping that you stick with them instead of shopping around.If you have a home insurance and you haven’t made a claim for years, your premium still keeps going up, it might be time to check some price comparison sites and find a better deal.Likewise, if you have a savings account and your bank reduces the interest without any obvious reasons, don’t be afraid of moving your money around.[bctt tweet="Keeping track of your regular expenses will give you a leg up on any changes that try to sneak in from your utility companies." username="pursuesimplejoy"]
Plan for Retirement
It is important that you plan for your retirement by saving up in a private pension plan. Your pension will depend on your contributions, and some schemes have guaranteed returns.You might want to talk to a financial advisor about your 401K options and work out how much money you can get after you stop working.There are several pension calculators online, but to see the full picture, you might want to get expert advice. Our financial advisor is through Edward Jones and we couldn’t be more impressed with the level of service and dedication we have through her. We know our financial future is safe with her guidance.
To avoid getting into financial troubles because of emergencies, you will also have to shop around for insurance deals. From home insurance in case a disaster strikes or you become a victim of a robbery, to health insurance to avoid getting into debt over a medical condition, there are several cost-effective ways of protecting yourself and your loved ones.Get a life insurance policy that covers your outstanding mortgage and leaves some extra money for your family.This hits a very personal note to me. My Mother died when I was 9 years old and did not have a life insurance policy. Not only was her death devastating, but it left our family in a very difficult financial situation. Make sure you’re covered. It’s not for YOU, it’s for your FAMILY.[bctt tweet="Making sure you're insured isn't just for you, it's for your FAMILY." username="pursuesimplejoy"]
Rainy Day Funds
It is important that you are prepared for emergencies. You might lose your job or get ill, and you will need to have backup funds to survive.Find free furniture on Craigs List or Facebook marketplace and sell it.Take online surveys that payout.Get creative and have an extra source of income to fall back on when you cannot work. A rainy day fund will allow you to avoid debt and maintain your net worth long term.
It’s Never Too Late
Whether you are a homeowner or are just getting on the property ladder, you need to start thinking about your long-term finances.Most people in their 20s and 30s don’t even consider how they will fund their retirement. Make sure you focus on the long-term return on investment whenever you make financial decisions, keep an eye on your regular expenses, credit rating, and net worth.I promise it’ll be worth it!