Life is full of uncertainties. We are never sure of what the future holds, but we can plan for it. The key to managing situations that life may throw at you is to be prepared.
More importantly, to navigate through financial turmoil, you need to set your finances in order. Such situations may include sudden unemployment, health emergencies, or even debt traps. Whether you live alone or are in a family set up, you need a financial plan, and most importantly, you need to implement and stick to it.
You just have to start where you are and find your way up. The earlier you take control of your financial future, the better you will get as you grow your wealth. Remember, financial insecurity can cause depression and other unhealthy conditions.
Six Surefire Steps to Securing Your Future
Pay Off Your Debts
It is nearly impossible not to have debts in your adult life. That said, you need to have a payback plan even before you borrow, whether from a financial institution, friends, or family. If you can, have backup sources of income to help you pay your debt in time.
You need to uphold your commitment to pay when it’s due to maintain your reputation and credibility. To start with, make a list of your debts and their due time. The best way to go about debts is to pay those with the closest due time, followed by those with the highest interest rates, as these will eat more on your finances.
If possible, find a way to consolidate your debts into a huge debt that can easily be managed and tracked. Having several small debts can be mind-boggling to track. Therefore, cutting down your debt appetite is recommended, especially for non-essentials.
If you have to borrow, do it for investment purposes and not to finance your lifestyle to ensure your gains outrun your borrowing costs.
Saving is the best habit to nurture as early as possible. Set up an emergency fund to cushion yourself from financial disruption. The best time to start saving is right now.
To build the savings culture, just start small and gradually increase while not causing yourself discomfort. A good margin to work with is setting aside about thirty percent of your income. Over time, your savings can eliminate the need for borrowing money.
You may consider putting your savings in a bank account to lower your risk of using it. The closer your savings are to you, the more tempting it can get to use them. To make saving more fun, have a purpose for the amount saved.
Setting money aside is not enough. You need to invest your hard-earned money to grow your wealth. You can decide to go for short or long term investment options or even both. The recommended option is to have both to meet your cash demands when the needs arise.
You can invest in gold and silver or go for stocks, forex, bitcoin, bonds, dividend stocks, index or hedge funds, and real estate, among others. Go for choices that you understand and are comfortable with. Seek advice from financial advisers first and take your time researching before you settle for one.
Investment decisions should be well-informed and not rushed to avoid regrets. While investing, it is recommended to diversify your investments to lower your financial risks in case things turn out sour in any of your choices. Split your investment capital into chunks and distribute them into the ventures of your choice.
Plan For Your Retirement
Your retirement may come sooner than you expect, and thus having a retirement plan will make things easier for you. The earlier you start planning and contributing to your retirement fund, the better your options will be. Having a retirement fund set up early can enable you to retire early.
If possible, try setting up automatic monthly contributions to a retirement plan like your own Roth IRA or an employer-sponsored 401(k). The most important thing is to make saving a habit. Remember, your retirement package is a result of your compounded savings.
When your income increases or if you have achieved your financial goals, you can invest your contributions.
Buy An Insurance Policy
Buying an insurance policy can lower your financial risk and disruptions when planned appropriately. Choose insurance policies based on your needs, whether that is your family’s health or children’s studies, among others.
Life insurance is also an area you should consider. It would be best if you planned for your family’s financial security in the event of your untimely demise. Read through the benefits of each insurance policy before selecting any.
Prioritize Your Needs Over Wants
Rid yourself of impulse buying habits to avoid regrets. Sleep on your big purchase decisions. Take days, if not weeks, to decide on cash-intensive purchases.
Prioritizing your needs over wants helps in averting unnecessary debt traps. Make as much of your purchases as deliberate to avoid buyer’s remorse.
Securing your future gives you the courage to face life head-on. It also gives you peace of mind when you sleep. It is fulfilling to know that your family’s future is secured .
The most crucial factor in your financial journey is to make saving and investing a habit. It would help if you looked at savings as your vehicle to a secure financial future and not a self-deprivation exercise. In addition, you need to constantly expand your financial knowledge to keep up with the changing times.
Find books, seek professional advice, or attend seminars to help you make better and informed decisions. Start your journey with whatever capital you have and grow it from there. The best advantage of starting while young is that you can recover faster from financial mistakes.
Writing down both your short and long-term goals subconsciously is important as it paves the way for you to achieve them and keeps you accountable. Occasionally, reward yourself when you achieve your goals to boost your drive. Be investment savvy to increase your streams of income and secure your future.