Published by Taylor Financial Group
When you’re struggling to get ahead, the idea of taking over your finances can be intimidating. From budgeting, saving, credit cards, paying off debt and avoiding money mistakes, it’s clear that getting ahead of your finances is no easy task. It takes determination, a strong desire, and the realization that there will be some setbacks. The good news? It IS possible to take control of your financial life and we are here to help!
Try following these five rules…
1. Track every and all expenses. Budgeting your money doesn’t have to be complicated, but it’s necessary to put an emphasis on saving. How much are you spending on rent and utilities? How much are you spending for travel and fun? Calculate all money in and all money out so that you can be sure that you’re not spending more than you can afford. Click here for a sample organizer. Our personal financial planning process, WealthMatch, can help us analyze your income and expenses along with your assets and liabilities to create your current financial picture.
2. Save for retirement early and often. It’s important to start saving for retirement as soon as possible. It’s good practice to contribute a portion of your salary into an employer-sponsored 401(k) plan, or into another retirement account (like an IRA) if your employer doesn’t offer a 401(k) plan. For example, if you put $5,500 into an IRA for 30 years and receive a 6% rate of return, you’ll have a total of $403,230! And now, many retirement plans allow up to $61,000 of contributions (for those over age 50), so it pays to know the rules.
3. Create an Emergency Fund. Always be prepared for bumps in the road. So, whether you total your car or lose your job, it’s important to have an Emergency Fund/liquidity fund. In a perfect world, you should have enough to cover your typical monthly expenses for three to twelve months (or more), depending on your needs. These funds will prove to be beneficial in unanticipated circumstances (including a market downturn).
4. Have zero credit card debt. Paying down high interest credit cards should be a priority! If possible, pay your balance off at the end of every month. You should also try to keep your balance below 30% of your credit line to avoid damage to your credit score.
5. Designate beneficiaries on your retirement accounts and life insurance policies. Designate those closest to you as beneficiaries on any savings and retirement accounts, as well as insurance policies that you may have. While the hope is that you’ve got a long life to live, it’s always good to be prepared for the possibility of not being around or able to make decisions about where your money will go. And, don’t forget to include contingent beneficiaries, as well.
Establishing a solid financial foundation is key to long-term success. As always, if you’re feeling overwhelmed with your finances, contact us today to find out how we can help you take control of your future!
Sources:
Money Magazine, 5 Milestones You Should Hit Before Turning 30, December 2017
The opinions are those of the writer, and not the recommendations or responsibility of Cetera Advisor Networks LLC or its representatives. Some IRA’s have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney.
Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty.
