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The term “financial security” is often used but not as often defined. The phrase can mean different things for different people, however, it should include having the ability to meet your current and future needs while simultaneously feeling prepared to cover emergencies. Financial planning can be complex, but it doesn’t have to be overwhelming. Having a solid financial plan can help you spend less time worrying and spend more time focusing on the important matters in your life like your family and friends, job and future goals. Here’s a list of helpful tips that should help you on your way to a comfortable retirement.
- Lay your foundation: Start with where you are today and think about where you want to be in your future before you start saving. Develop a list of your assets, liabilities and income along with your usual monthly expenses. This is your basis and a good indicator of where you currently stand. Once you know where you stand, you can begin the process of developing realistic, manageable steps to help you get to where you want to be.
- Treat savings as an expense: Saving every month can be challenging and sometimes even frustrating. It can be helpful to treat your savings as a recurring expense like your mortgage or insurance so you don’t have to worry about adjusting your budget every month. This method can also help you avoid over-spending your disposable income on consumer goods.
- Consider your potential expenses in your financial plan: When planning for retirement make sure you consider all of your potential expenses, this includes but is not limited to medical and dental costs, long-term care, groceries, recreation, income taxes and transportation. It is important to make a list of all the expenses you may incur during your retirement years so that you can continue living a comfortable lifestyle in your later years.
- Use credit cards wisely: Credit can be a helpful financial tool if used wisely, however, they can easily be sources of debt issues. A good rule of thumb is to use credit only for the major expenses in your life such as your home, school, medical expenses and car. Do not live above your means and always use cash when you can to avoid spending money that you don’t have.
- Diversify investments to balance risk and reward: Don’t put all your eggs in one basket. No one can ever be 100 percent sure of what the market will do at any moment. Diversifying your investments helps you manage your risk. Asset allocation is a key part of managing your retirement assets.
- Embrace change and the need to be flexible: It is important to be prepared for the what-ifs in life because unexpected costs do happen and they can have a significant impact on your financial security. It’s also important to periodically reassess your income, expenses and financial obligations to help you determine if you need to increase or decrease the amount you save on a regular basis.
- See the future today and start as soon as you can: Short-term needs and goals are easy to focus on. However, achieving financial security is a long-term investment in yourself. For this reason, it is never too early or too late to start saving for retirement. Every little bit counts and every penny saved is a penny that can help you later on.The sooner you start investing the easier it is to turn even small amounts of money into big bucks. The earlier you start, the more time is on your side!
Financial security in life isn’t something you just wish for, it is a process that takes time, effort and sometimes sacrifice. However, the results are worth it. If you follow these seven steps, you’ll be better positioned to take control of your financial security.