If youve ever worried that youre running on an empty financial gas tank, youre probably among the 25 percent of Americans whose biggest fear is running out of money with a family to support – and never being able to retire. Gaining financial freedom can be a challenging task. But with the right attitude, it can also be a thrilling and empowering one. These five tips can help you improve your overall financial security.
Managing your finances effectively and efficiently can feel like moving a mountain. To successfully manage your money, you need to be armed with financial knowledge, skills and tools – such as retirement accounts or life insurance policies. You need to know when to be careful, when to boldly seize the opportunity, and where to put your money so you can retire and protect the ones you love most – your family!
Tip #1: Regularly discuss your dreams.
Financial literacy isnt a goal line, but a journey. Throughout this journey, find the time to remember the dreams you and your partner had when you first met. Think, talk and go into detail about what you want your family to have – under any circumstances. Share your aspirations for the future. Do you want to pay for your daughters college education? Purchase a car or a home? What about having a cushy retirement account, or starting a new business?
Whatever your goals are, frequent discussion of your finances will help you remember why youre doing what youre doing – and for whom.
Tip #2: Be prepared.
Working adults with dependents and business concerns need life insurance – period. Many people think about getting life insurance, but put it off because they assume they cant get it – either because its too expensive, confusing or difficult to buy, or because they have health challenges that might preclude them from qualifying for a policy.
If any of these excuses sound familiar, youre not alone. Getting a handle on some of the life insurance options available to you and your family is critical to financial success and security.
Tip #3: Remember that life is what happens to you while youre busy making other plans.
John Lennon famously sang: Life is what happens to you while youre busy making other plans. At some point in your journey through life, you might just run out of gas. When that happens, youll want to make sure you have an extra financial gas tank in the form of a separate savings or money market account that is strictly for emergencies. Having money set aside for a life hiccup or emergency will prevent you and your partner from being plunged into debt and having your path to financial freedom thrown off course. And having that peace of mind is priceless.
Tip #4: Be meticulous about your budget.
Carefully managing your money on a day-to-day basis can be crucial to improving your financial knowledge and success. Do you wake up every morning before you start the day to review your bank account and latest transactions? Its a good habit to start now, since it will begin to shine a light on whether youre spending less or more than you earn – and if you are consistently saving. As a rule of thumb, try to save 12-15 percent of your gross pay for short-term goals, long-term goals and unexpected expenses. Its a good idea to set this percentage aside as soon as you receive your paycheck, as opposed to after you start spending it.
Lastly, don’t undermine your budget by getting caught up in other peoples spending habits. By keeping your eye on the prize and owning your financial knowledge, youll stop worrying about other people and the things you cant control.
Tip #5: Start investing.
Just like life insurance, the assortment of options for investing your money is vast, and ranges from bonds and mutual funds to stocks, annuities and CDs. And then theres the dizzying array of account types: taxable accounts, IRAs, Roth IRAs, and company retirement plans like 401(k)s. As overwhelming as all this may seem, investing doesnt require an MBA or a degree in economics – and its never too early to start learning.
Keeping your financial gas tank full is crucial for achieving financial security and success. These five tips will help you improve your overall financial capability while protecting your familys financial future.