Accounting For Your Future
October 1st, 2013 by Bryan Brown
One of the most valuable skills you can have is an understanding of your financial future for the protection of you and your family. Whether you’re in your twenties and just fresh out of school or in your late fifties and are looking closely at retirement, it’s important for all of us to have a firm grasp on where our money is going and how we’re managing to get more. Here are a few things we thought were important to helping you manage your financial future.
Establish An Emergency Fund
One of the first steps you should take when crafting any financial plan is getting the money together to start an “emergency fund”. This fund can be used in case you would encounter any major financial setbacks such as unemployment or sudden medical bills. It’s recommended to keep around three to six months of your normal income in a secure account that you can access anytime. This way, if there are any reasons you would go without money for a while, you would be taken care of. To do this, get in the habit of saving your disposable income on a regularly. You can even decide to designate a certain amount of your paycheck to your savings account on a monthly basis. This will help by making the saving decision for you.
Pay Off Your Debts Immediately
Whether or not you still have outstanding student loans or are still paying for a large medical operation, it’s vital that you get rid of these debts as soon as possible. Freeing yourself from debts allows you to use all your future income toward saving and investing. You also need to be wary of any outstanding interest rates. While it may be tempting to delay paying your debts, they will just get more expensive as compounding interest rates can make your debts climb to entirely new levels. Do the smart thing and get these taken care of immediately.
Set Money Aside For College Tuition
We all know that college is one of the biggest expenses in any one child’s life. On average it costs more than $60,000 a year to send a child to school. If know you plan on having a family and sending multiple kids to college, it’s best to start saving as soon as you possibly can. You can start by creating a 529 college plan in order to reduce the amount you will have to borrow for your children in the future. It may also be advisable to look at prepaid rates for current universities. This will allow you to lock in at current tuition prices instead of being susceptible at the likely increase in prices.
Start Planning For Your Retirement
I’ll bet everyone in an office right now dreams of the day they can one day lay out on their private yacht while sipping cool lemonade from a straw. Until that day, it’s important to keep your finances in order so that that dream may become a reality. There are a number of ways to do this. First, immediately inquire about your 401(k) plan at work. On average, one-third of people who have one actually do not contribute. Even if this isn’t the case, you should definitely consider contributing, especially if you’re employer offers matching programs.
You should also make sure that your investment portfolio is diversified. By putting all of your eggs in one basket, you are putting yourself at serious financial risk. This means investing in multiple companies and multiple different industries. Don’t let your financial status be determined completely by one market.
Finally, if you need to see some concrete numbers today regarding your retirement, try using CNN’s retirement calculator. This allows you to use your retirement goals and then develop a strategy from there.
Hopefully you find all of these tips useful when trying to plan for your financial future.