2017 Money Expert Cheat Sheet: 6 Steps to Achieving Financial Freedom

Here are the rules:  We’ve all been at zero and even below zero several times, we’ve battled back a few times, and then we did it again and believe or not, again.  We’ve all started new jobs and new careers. Sometimes because our interests and what we thought we wanted changed. A few times because all bridges had been burned beyond repair and almost always because we desperately needed money.

People who knew you back in those days, don’t know you at all today. And so it goes.

Here we are again, saying goodbye to one year and starting a new year, which is the perfect time to change and become a new person financially.  A critical first step is to increase your financial knowledge and get your personal finances on track. Whether you feel like you are on track to meet your goals or need a little extra boost to get on track, mark each of these items off your 2017 checklist to ensure a successful year.

Emergency Fund

Life happens quickly, and an emergency can quickly crush a bank account if not prepared for. Start your 2017 right by looking at your emergency fund. If you don’t have one, start one immediately! If you don’t think you need an emergency fund, you are wrong. You never know when an emergency could happen.

Ideally, everyone should have at least 3 to 6 months of expenses saved in an emergency fund that you can easily access. Cars break down, furnaces die and hot water heaters stop working. Also, job security is not what it once was. Mass layoffs these days have become more commonplace, and thinking you’ll have your job until you are ready to retire some day in the future is a big gamble.

Store the emergency fund in a high-yield savings account so you are not tempted to touch it on a rainy day. Online banks and credit unions typically offer the best savings account rates. Don’t leave your family’s livelihood to chance.

Employer 401(k) Match

Most large employers offer a 401(k) plan, which helps you save for retirement. Social security benefits will probably not be the same as today when you retire, so it is important to save for ourselves in addition to social security.

If your employer offers a 401(k) match, make sure you are taking 100% advantage. If you are not, you are leaving free money on the table! Large companies typically offer 3% to 6% of your annual salary as a match when you contribute to your 401(k). Don’t leave that money behind!

In addition to free money, your 401(k) offers a chance to save for retirement while saving on taxes. 401(k) contributions are pre-tax, and you don’t pay income taxes on those earnings. Instead, you pay income taxes when you withdraw during retirement, presumably at a lower tax rate than you pay today.

Automated IRA Investing

After you have an emergency fund saved and are taking advantage of your employer’s 401(k) match, the next place to focus your savings is your Individual Retirement Account, or IRA.

There are two types of IRA accounts. Younger investors do best saving with a Roth IRA, while those nearing retirement do best with a traditional IRA. A traditional IRA uses pre-tax dollars like a 401(k). A Roth IRA uses after-tax dollars, which means you pay taxes on your income when you earn it, but do not pay taxes on funds when you withdraw during retirement.

Debt Freedom Autopilot

Do you have student loans, a car loan, or credit card debt? It is time to focus on steps to get out of debt. These types of loans steal from your income each month without any benefit. Interest charges on credit cards are often in excess of 20%. Wrangle your debt and stop giving away your hard-earned money so you can save, invest and spend it on you and your family.

The best method to get out of debt quickly is to follow the “debt snowball” or “debt avalanche” methods popularized by personal finance guru Dave Ramsey. With a debt snowball, borrowers are encouraged to pay off accounts with the lowest balance first, making increasingly larger payments to each account until your debt is cleared. A debt avalanche instead focuses on paying highest interest debt accounts first, then working down the list.

Technology can be your friend. You can create recurring automatic payments through your bank’s website to make payments each payday, once a month or whatever makes the most sense for you. If you get a bonus at work, a tax refund or other lump income, put that toward your debt payoff and get yourself out of debt for good!

If you are brand new to budgeting, there are financial web based options and free apps designed to make getting out of debt as painless as possible. The most popular free option is web based Mint.com. Other good options include You Need a Budget and Quicken.

Build a Budget

Saving for retirement, getting out of debt and achieving financial independence only work if you have the cash to save and can make extra debt payments. If you find yourself continuing to live paycheck to paycheck and struggling to manage competing financial priorities, it’s time to put together a budget.

Budgeting doesn’t have to be scary, difficult or painful experience. Instead, look at it like creating a detailed map for your spending. You know where your money will go over the next month so you won’t spend it somewhere else.

Life Insurance

Getting your finances in order will pay dividends for the rest of your life. Just as important, it creates a security net to protect yourself and your family from unexpected financial emergencies. The lynchpin in your family’s financial safety net is life insurance. If you have no idea how much life insurance you need, you’re not alone.  Most people have no clue how much life insurance or what type of life insurance they need.

Term life insurance is life insurance that covers the insured individual for a specific period of time. If the insured dies at any time during the term, the entire policy value is paid out to the named beneficiaries. At the end of the initial term period (typically 10, 15, 20, 25, 30-year term periods), the term life insurance policy premiums increase annually thereafter.

Policy values are flexible to meet both your budget and family’s needs. Whether you want to leave your family with $50,000, $1,000,000, or even more, you can make it happen with term life insurance. And life insurance costs a lot less than you might think!

Life insurance is a critical piece of any successful financial plan as it’s designed to protect your family and loved one’s in the event of your untimely death. If you were to unexpectedly pass away today, would your family be able to survive without your monthly paychecks? If someone relies on you financially then, you absolutely need to consider the benefits of term life insurance.

It only takes a few minutes to apply, and it protects your family for a lifetime.

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