Securing your financial future has never been more critical than it is today. In fact, just 18% of US adults have a comprehensive retirement plan!
It’s clear to most that having both short and long-term financial strategies in place is essential. Creating and sticking to a financial plan for you and your family is a way of ensuring the realization of your life goals and the dreams that you have for your children.
What’s a Financial Plan?
A financial plan is perhaps best described as a road map of all your finances, a way of understanding clearly what your current finances look like now and how you’d like them to look in the future.
Your financial plan will include your earnings, savings, debts (including loans and types of loans), insurance, investments, and the status of your cash flow situation.
Some make the mistake of thinking that having financial strategies in place is just for the wealthy. But this is far from the truth. It could be argued that wealthy people only got that way by having a sound strategy to start with. The truth is that anyone can make a financial plan for themselves, and here’s how:
1. Create a Budget
You need a budget. Period.
Why? Because it tells you, on a day to day basis, how much money you have to live on and how much you can put aside for the future and emergencies. It’s important to consider all your outgoing expenses (bills, insurance, rent, mortgage, food, etc.) and compare them to your income.
Ask yourself if you are living within your means, and if there any adjustments you can make, like reducing non-essential items.
2. Set Your Goals
What do you want your life to look like in 5, 10, and 20 years? Only by setting goals can you be inspired to achieve them.
Obviously, there will occasionally be times when an emergency or unforeseen financial challenge occurs. This might be a time to consider a short-term loan, like a title loan, to cover the unexpected expenses.
Also ask yourself what you want to save for. A vacation? A new home? Your retirement? A college fund for the kids? A big family wedding?
Whatever goal you set, be sure to make allowances in your budget so that you can put money aside each payday that will help you reach your goals.
Here’s one approach for each monthly paycheck:
- Spend no more than 50% on rent/mortgage, utilities, transport and petrol, food and other regular payments.
- Spend no more than 30% on your lifestyle, such as dining out, clothing, and entertainment.
- Spend no more than 20% to repay debts and save for the future.
3. Create an Emergency Fund
We all know that we can never be prepared for everything. But effective planning for the unknown can give you a financial cushion to see you through difficult times.
Ideally, your emergency fund should cover three to six months of living expenses. This is not always possible for people on lower incomes, but that’s why there are other short-term solutions available.
A great way to get started is to simply set $500 aside and then build your emergency fund gradually until you have a good safety net in place.
4. Talk to Your Employer
Ask your employer if they have a sponsored retirement plan like the 401(k) or the 403 (b) and if they will match any part of your contribution.
Of course, it means you get less in your paycheck, for it’s a win for the long term, wince you’ll be putting more money away for your retirement.
5. Tackle Your Debts
When debt is in the way, it’s always easier to bury our heads in the sand instead of confronting the obstacle. Start by first paying off any high-interest debts and then tackling the lower interest debts after. This will prevent interest from accruing.
If you have lots of credit card debts, you’re always better off paying off larger chunks of the higher interest rate cards first rather than paying off small amounts on each card. If this is proving tough to do, you could consider consolidating your debts so that you have just one lower interest loan.
6. Check Your Credit Score
The higher your credit rating, the better the interest rates you’ll get on loans. There’s plenty of information about how to check your credit score and how a great credit rating can be beneficial to planning your financial future. It’s always a good idea to educate yourself on the many ways you can improve your credit rating.
7. Review Your Insurance Coverage
As we all know, an emergency fund won’t usually cover everything. Be sure to check your various insurance policies to ensure that you have adequate coverage for you and your family’s health, life, and property.
Disregard any suggestion the investing is only for the wealthy. Investing is saving in the truest sense, but better yet since most investments grow with interest over time.
Here are just a few examples of easy investment you can make:
- Open an investment account, like a Roth or Traditional IRA, both of which allow you to effectively build retirement savings.
- Open a college savings plan. There are state-sponsored plans called 529 programs that give you tax-free investment growth for educational expenses.
Are You Ready to Adopt Some New Financial Strategies?
By now, you should have a better idea about how to utilize sound financial strategies to future proof your finances. Of course, even the best planners can get hit with unexpected expenses that require a quick solution.
If at any point, you get in a financial jam and are in need of quick cash, a title loan can provide you with a short-term solution. But it’s critical that you act responsibly, make your payment on time, and pay off the loan as quickly as possible.
If you’re in the greater Atlanta are, contact us today for more information about our services and how we can help you. We have offices conveniently located in Lawrenceville and Norcross to serve you.