While figuring out whether you’re financially stable or not
has a little more to do without just being able to decide if you could survive
longer than paycheck to paycheck, but more has to do with an overall picture of
the household finances. Handling the
finances is a lot to deal with, one that should not be tackled alone, especially
if you share the burden with a significant other, but even if you are single,
it’s always a good idea to bring in a family member, friend, or professional in
order to ensure you’re on the right financial path. Certainly, there is always room for
improvement, but with a few tweaks to your current financial outlook, you can strive
to be financially independent stable for now and into the future.
A Solid Emergency
Fund Built UP
As sure as you can be about being on the right track when it
comes to the finances, you never know what will come up out of nowhere and hit
you with a bill that you were not expecting, causing you to put on your credit
card and risk going into debt for months or even years, until the balance is
paid off. By saving up a few months’
worth a reserve, you can give yourself a financial cushion to protect yourself from
the unexpected. While it may take a
while to save up that amount, avoid saving even more as those funds sitting in
an account will not grow at all compared to being in a brokerage or retirement account.
Much like getting hit for an appliance repair will cause
your budget to become out of whack, when medical bills, home damage, or an auto
accident, it’s best to be prepared with the proper insurance that will provide
adequate coverage in case of emergency.
On top of that, whether you want your loved ones to be covered in case
of your untimely death, life insurance can be arranged as well with premiums
decided by your health and age.
Contributing to a
After you’ve spent your entire adult life working, by the
time you have become of retirement age, the last thing you want to worry about is
having enough to life off, let alone not being able to finally travel and enjoy
every life experience without the stress of work any longer. By contributing to a retirement account early
on, you’ll have more time for your funds to grow over time. It can be a large chunk of your check going
towards an account that you will not need until possibly decades later on, but
if you think about your long-term future, you may want to put saving for retirement
more of a priority.
Account Set Up
As you begin to start a family you think about more than
just your future, but of your children’s as well. While retirement can be decades away, college
is under eighteen years away so it’s best to get on saving as early as you can
so you can to make sure you can help with a portion of college. With several college savings plans available,
even contributing a little each month will add up to at least pay for a few
semesters when it comes time to head off to college.
Maximizing Free Money
Since money is likely tight by the time you pay for monthly
bills, food, gas, and savings, you want to hang onto every dollar you can, so missing
out on free money should always be avoided.
First, using a rewards credit card where you can earn points or cashback
on the items that you would normally purchase anyway is a great way to earn
hundreds of dollars a year, depending on how much you spend, while making sure
you’re contributing to the max contributions from your employer is a great way
to earn money towards your retirement account that could add up to thousands a
year or tens of thousands over the next couple decades.
In the end, it’s best to avoid paying interest of the pocket
of your hard-earned income, so the more you can stay out of debt, the
better. While can be tough when it comes
to large purchases such as a home or car, but day to day spending from a credit
card, especially with its high interest rate, should be the first to go. Mortgage rates fluctuate quite often, so
taking advantage of a refinance to a lower rate is a great way to not only save
money every month, but over the life of the mortgage.