How to Handle Your Finances and Plan for the Future
February 7, 2019
It is a sad fact that financial education isn’t taught in schools. Children in their early teens could stand to learn a lot concerning the managing of their finances, and it would be something that will help them tremendously later in life.
Until financial literacy is taught in schools, we can rely on the internet to gather information and advice on how to better manage our balance sheet and plan for the future. Do, however, keep in mind that the sooner you start on this path, the faster and easier it will be. That said, here are four steps towards your fiscal responsibility.
Gaining Back Control of Your Money
The overwhelming majority of the population has no plan when it comes to managing their money. They don’t keep track of their finances, spend recklessly, take on credit they can’t afford, and, sooner or later, find themselves in a pretty sticky situation. Having a high income doesn’t help either if people have no financial managing skills. How often have you heard of lottery winners, movie stars, singers, athletes, etc. going broke, despite earning millions?
A proper personal budget is a way to go! Such a workable budget will put you back in control of your money by allowing you to give every dollar a purpose. Though simplistic, one such budget will help you keep in line with your long-term financial goals and will sit at the very foundation of your financial success.
To make things somewhat more manageable and not feel so strict, you can also add conscious spending to the mix. In short, conscious spending is a reevaluation of your spending habits, so that understand where you derive the most enjoyment from purchases.
Once you set your budget, it’s time to work on your debt. For many, debt is what keeps them from moving forward and investing in their future. The general rule here is that the more obligation you have, the more you need to cut on your spending so that you pay off your debt faster.
Start by tackling high-interest loans first and move down the list from there. If you do find yourself in need of an urgent loan, stay away from payday lenders or similar high-interest loans. Opt instead for a reputable lender with no hidden fees or exorbitant rates.
Once you’ve got a handle on your debt, it’s time to save up. Start by building an emergency fund, somewhere of around six months’ worth of expenses. You should only touch this money in case of hard times such as job loss or various unforeseen circumstances. You should, however, focus on bringing it back up as soon as possible.
The next step is to work on your retirement. Most financial advisers recommend a minimum of 15% of your gross income each year. You can use your 401(k) as part of your plan, but you should also use a Roth IRA, among other such tools, to increase your investments. Similarly, any significant investments you see down the line such as a home down payment, child’s education, etc., you should start saving up.
Finally, when you have all of the above in order, you should utilize other tools such as real estate, mutual funds, bonds, and annuities to diversify your investment portfolio. Over time and with careful planning and diversification, your investments may generate more than you do. You should reach this point by the time you retire.
Planning for your future and seeing it through will not happen overnight. You’ll need a fair degree of determination and diligence to see it through. And if you see yourself ever needing a short-term loan, Illinois Lending Corp is at your disposal. Apply online today or call us at 1.877.LOAN.195