Maintaining a healthy financial portfolio is critical to living a happy and stabilized life. Understanding your personal finances and working to improve your financial standings have significant benefits that extend far beyond the wallet. When it comes to money, there are certain things every individual should be in tune with, including the following:
1. Have Attainable Financial Goals: Mapping out short and long-term goals in relation to your health, wellness, education, family, dreams and travel will make your financial ambitions closer within reach. Knowing what you want and the steps you need to take to make your ambitions a reality will aid in securing your financial future.
2. Create and Maintain a Budget: Understanding the money you are taking in versus the money you are spending is the basis of your financial health. Creating a financial calendar forces you to think about how much money is being spent each month and how much is being saved or invested. By knowing where your money is going, you will be better able to see and (hopefully) curb unnecessary spending and reduce debt.
3. Build Credit Responsibly: When used correctly, credit cards can be extremely powerful financial tools. Credit cards help establish credit history, allow users to receive special perks and premiums and often award cash back bonuses. Credit cards should be paid off in full each month. Racking up massive amounts of debt negates the benefits associated with credit cards. Planned debt including borrowing money to remodel a home, or making a large purchase like buying a car, are typically debts that people plan for and factor into their expenses. Unplanned and unnecessary debt should be avoided at all costs. If you cannot pay off debt each month, make sure you use a credit card with the lowest interest rate.
4. Invest in Education: Furthering your education often equates to greater career success. Increasing your education does not always mean spending a lot of money, however. Attending conferences, taking a community class, going to a vocational school, enrolling in online class and attending seminars through work, are all ways to get your education level up without spending a great deal of money.
5. Get Insured: Protect yourself in case of emergency and save yourself unforeseen costs in the process. Insuring your home, health, automobiles, business and personal assets not only gives you peace of mind but saves you time, energy and money in the long run.
6. Save and make sound investments: Looking into your finances and assessing how much you can save each month and whether or not you would be able to support yourself for six months in case of job loss are both very important aspects to financial health. Most Americans can expect to work 50 years prior to retirement and need to save and plan for their post-work lifestyle. Preparing for the rest of your financial future can seem like a daunting task, but you can always start small by opening up a savings account and talking to a financial adviser about your investment options.
7. Be a homeowner: Owning a home leaves you with a high-value asset once you pay off your mortgage in 15-30 years. When purchasing a home it is important to make sure you have 20 percent saved to put toward a down payment, your monthly payments will be lower and you can eliminate mortgage insurance. When searching for a home make sure your Realtor adheres to your planned budget and that your mortgage broker lines up loan options that are comfortable for your lifestyle.
8. Create a Will: Death is a part of life, there is no avoiding it. Planning what will happen to your estate once you’ve passed away will save your loved ones a lot of stress. Working with an experienced estate attorney is a key element to insuring that ambiguities and unanticipated problems are avoided. Trying to draft your own will with licensed software often leaves many loose ends. The initial consultation with an experienced attorney is typically free – confirm this with the attorney prior to meeting. It is also important to have beneficiary designations for retirement accounts and life insurance documents coordinated properly. Look into establishing a living will as well so that your health is handled properly, should anything unexpected occur.
Making sure your financial house is in order will make other aspects of your life easier. By taking control of your finances, you will be better equipped to deal with life’s little (and not-so-little) stressors