Updated: Nov 5, 2020
Most people want to have a good financial plan that can allow them to save for the things that matter most, and not be a slave to debt. However to accomplish this, having self-control and being disciplined are two essential qualities one must cultivate in order to succeed. Many today give way to their wants now and suffer the consequences later causing a great deal of stress and a mountain of debt to deal with. To help avoid this, here are a few questions worth considering along with a couple of strategies to help one get headed in the right direction.
Consider these questions
What are my financial goals?
Do I have enough money saved for an emergency?
How much debt is too much?
Having financial goals in mind are a must. If someone just goes through life spending money on whatever they want at any time is a sure-fire way of bringing disaster. Knowing what things are important and having a plan will help keep one focused and disciplined to accomplish what they want in life. In addition having a timeline to accomplish their financial goals will help guard against giving in to needless wants and make it easier to be content. So whether it’s retirement, paying off the house, or traveling in the ‘work optional years’, setting the goal and making it a priority can give the right motivation to make it a reality.
Life is full of surprises, some good some bad, unfortunately when it’s bad it often can be expensive. A car accident, a doctor visit, something stolen, an appliance breaking, or being laid off, things happen and it can disrupt the game plan for meeting one’s financial goals. Putting money aside to build an emergency fund is vital. The common recommendation is having three to six months of living expenses saved up. That may sound like a lot, but making a realistic budget and having the self-control to stick to it, that amount can be saved up sooner than one may think. Then when the curve ball gets thrown (and it will) the money will be there and the disruption to your goals will be minimal.
Pay down debt
Having a mortgage payment and even a car payment is fairly standard and common. The interest rates (especially now) for those loans are fairly reasonable. In addition there is usually some value and hopefully equity in those assets that could be sold to pay off the debt. However credit card balances and store credit cards can start wreaking havoc on financial goals and budgets. The higher interest on the borrowed money, often in the 18% range can make it extremely hard to pay off. Paying those larger interest payments should be of utmost importance when making financial goals, and setting budgets. After the debt is paid off, keeping it that way is just as important.
There are many more things to consider when making a financial plan, and each persons circumstances are different. These are just a few key points to help guide one when making a plan for themselves. After these initial steps are taken, and a good pattern is set, setting up an investment account is the next step. To help accomplish your financial goals feel free to contact us to set up a specific plan for your personal circumstances.
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Investing involves risk and you may lose your principal.