Broker Check

Free Retirement Guide

It's never too soon to start preparing for retirement. But do you know what to look out for? Download our free ebook, "Retire Happy: A Simple Guide to Your Next Big Adventure."



Thank you! Oops!

5 Personal Finance Habits Everyone Should Follow

| January 07, 2019
Share |

Financial Habits Needed for Success

If you're facing difficult financial times, we recommend several steps to get out of debt, to save to purchase big-ticket items and to start saving money. In the process, you can be more affluent and get ready for retirement.

It is a topic very few people like to chat about: money. Many people are preoccupied with it: whether we have it or don't, how much we have vs. how much we need, how we can get more, and what we are spending it on. No matter your feelings on the topic, it is bound to be on your mind. One important, if less interesting, area is the topic of financial planning. It often gets dismissed or overlooked, but in truth receiving sound financial advice can help you take control of your budget and remain on top of your situation no matter the position you're in.

Think of issues such as personal investment opportunities, taking control of debt, high-interest saving, and so many others that people overlook too often. People may feel intimidated or embarrassed by debt or be overwhelmed by what seems like conflicting advice and options. Chatting with a qualified financial advisor can be a great way to gain clarity and give you more control. You can also take smaller steps in your everyday life and start changing your financial landscape today.

5 Personal Financial Habits

  1. Set and Stick to Your Financial Goals
    It is easy to spend money without thinking if you haven't earmarked a specific purpose for it. By setting goals, you make yourself accountable for where your paycheck goes every month. Whether you are saving for school, a car, a wedding, or a house deposit, creating tangible goals makes it easier to save money and allows you to set a budget.

    The first step is to make the goals real; writing them down is a significant first step to achieve goals. Calculate exactly how much you need for that special purchase and look at how long you have to save. Calculations help you divide the total cost by the time you have and decide how much to save per month. Treat the amount you need to set aside like your rent or a bill; it is non-negotiable, and you have to live on whatever is left.

  2. Track All Income and Expenses
    It is easy to get to the end of the month with nothing in savings. You may have a sinking feeling as you realize that you have no idea where most of it went. Tracking exactly where your money goes each month is the first step to taking back control.

    Upon getting paid, make a note of precisely what is in your bank account, and then be ruthless with recording spending. Write down every bill, every parking ticket, every overpriced coffee, and lunch out, every spontaneous purchase, every margarita. Stick to recording expenses for a month or two, and you will be able to identify patterns and places to cut back. Budgeting also helps you ration your treats. Having a super-rich coffee once a week makes it more of an event than having it every day, and you may find you enjoy it more.

  3. Be Transparent with Your Debt
    It is an unpleasant topic, but the simple truth is that facing debt head-on is the only solution. It is easy to bury your head in the sand and hope it goes away, but ignoring debt will help it grow larger and more out of control until you feel totally out of your depth. A plan can save you.

    Begin by writing out every single debt you have. Be brutally honest. Call up loan providers or banks so that you have exact figures, and get the entire amount on paper. Writing down your debts may be overwhelming, but it helps you work out exactly where you are.

    Many debt experts recommend starting with paying the largest and working down, but this depends on your situation. Perhaps you know you are getting a bonus next month that could wipe off your credit card debt, and it could help you feel more confident and able to tackle the smaller amounts.

  4. Pay More than the Minimum on Your Credit Cards
    Credit cards can quickly turn into false friends. They tempt you in with the promise of low-interest rates and the chance to get that must-have bargain there and then, but they can quickly sneak up and start consuming a large part of your wages with seemingly little progress.

    Paying off only the minimum ensures you will be in debt longer, and ultimately you will pay more back to the provider. Most credit card companies rely on customers paying the minimum, and this helps them get the maximum cash from you over a long period. Making more than the minimum payment reduces the amount of interest charged, so you clear the balance faster and keep more of your cash.

  5. Start a Retirement Savings Plan
    No matter your age, it is never too soon to plan for retirement. There are no guarantees with jobs or future economies, so it is smart to get ahead of the game and start saving. Planning also allows you to take advantage of great deals, such as those with higher interest rates and the best long-term benefits.

    The best way to start is to consider your likely required income. Where will you live? Will you have a rent or mortgage? Any dependents? Any health issues that are likely to escalate? Make a rough estimate of your anticipated living costs per week or month. If you choose weekly, multiply the totals by four to get a monthly average. The monthly amount times 12 is your average annual requirements. Consider how many more years you have before retirement, and this information can help you decide how much to save now.

Conclusion

Getting on top of your finances doesn't have to be intimidating. By thinking long-term and taking small but significant steps in your everyday life, you can help yourself make the most of your money and prepare for the future. Time to stop hiding, face the unpleasant music, and start taking control of your financial future and security today. You will thank yourself for it.

Share |