The unique state of the country gives you a chance to re-assess your finances. Use this time to create a budget allowing you to live comfortably now and after retirement.
A Household Budget
Creating and sticking to a household budget helps you identify where your money goes. As a result, you reduce wasteful spending and save money for emergencies, vacations, a home, and a plan for your retirement. There are many sites online that provide free worksheets for budgeting. Select the one that works best for you.
Eliminating the Burden
A life insurance policy will prevent you from leaving behind uncollected debt that loved ones will need to pay. You may have questions such as can I cash out a life insurance policy and is life insurance taxable? Contact your insurance provider to get a better understanding of its benefits and costs.
Get Smarter with Your Money
It’s much easier to spend money than to earn it. Careful decision-making going forward will prevent you from throwing away hard-earned dollars on frivolous spending. Every cent you spend should involve reasoning. Do you really need it and how it benefits you are questions you should ask prior to buying anything. This will allow you to slowly change your spending habits.
Think About Tomorrow
Most younger adults don’t think about their life after retirement. They focus on the present. Unfortunately, time slips away quickly and before you know it, you’re ready to retire and unprepared. Don’t rely on social security to provide comfort in your golden years. At best, government retirement benefits will cover your housing. This leaves you without spending money to enjoy your newly acquired free time.
A Retirement Plan
Many people have a 401k through their employment that includes a company match up to a certain percentage. If you haven’t signed up for your 401k, do it at the next offering. If you don’t have any retirement benefits through your employer or you are a freelancer, it’s up to you to start a fund. A 401k and Roth IRA are a few examples of retirement accounts you can benefit from.
One of the best ways to achieve financial wealth is to eliminate debt. Many people have nice things, however, they are cash poor. All of their income goes straight out the door to cover the debt. You need credit to maintain a good credit score. However, too much debt can have a negative impact on your score. For instance, a mortgage, a car payment and one or two credit cards paid on time result in a good score. On the other hand, if your debt is several car loans, a personal loan, and many credit cards near their limit, your score will be lower.
Credit Card Debt
It’s easy to rack up credit card debt if you use it to acquire items you otherwise can’t afford. A credit card should be used only for emergencies such as an unexpected car repair. You shouldn’t use it to pay for groceries or large ticket items unless you are able to pay the entire amount when it comes due. Any balance carried forward will accrue interest.
Shop for Less
Life is expensive. One way to acquire items for less is to shop during the “off” season. Retailers need to unload their existing merchandise to make room for new items. Buying your clothes this way will be more affordable. The same applies to holidays. Buy decorations after the holiday for the following year. If you need a new appliance, wait for a sale. Often during holidays, retailers markdown merchandise to increase revenue.
Learn to better manage your money and enjoy living comfortably now and in your retirement. Use the tips we’ve shared here to do just that.