Many people don’t start thinking about their money goals until a later age, and then panic when they realize they didn’t start early enough. Regardless of when you start thinking about your financial needs for the future, there are six basic steps that will help you achieve the stability you need. Going through this list, you might realize you’ve done some of these. Make sure you get started on every single one of these smart money goals for a better future.
1. Build an Emergency Fund
The very first thing you’re going to want to do is build an emergency fund. This is a crucial safety measure that will help you when you’re suddenly hit with big unexpected financial burdens. From car repairs to medical bills, this is what the fund is for. There is no limit to how much you should put into this fund, and you should put as much of your paycheck as you can towards it. Whether it’s $5, $50, or $500, every little bit helps.
2. Get Out of Debt
After you have at least $1,000 in your emergency fund, it’s time to start thinking about your debt. Most people have debt accumulating on their student loans, car payments, and a number of credit cards. Organize your debt from least to most and start paying it off. Do not use your emergency fund money to do so. If you already have $1,000 in your emergency fund and you need to choose between putting money towards the fund or your debt, choose your debt.
To avoid accumulating more debt and achieve your money goals more quickly, try to minimize credit card use as much as possible. If you can’t afford it and it’s not essential, don’t buy it.
3. Create a Budget
Budgeting is absolutely crucial to making intelligent financial decisions. How do you know if you can afford something if you don’t know how much money you’re making and how much you’re spending? Create your budget to track your expenses and subtract these from your total monthly income. Include rent/mortgage, groceries, utilities, insurance, and luxuries. Examine your monthly spending habits and decide what needs to go.
If you’re spending too much money going out to happy hour, cut it from the budget and have a beer at home. Instead, put that money towards your money goals for the emergency fund or debts. Even little changes to your lifestyle can save a bit extra here and there.
4. Start a Retirement Account
It is never too early to start saving for retirement! Putting money in your emergency fund, paying off your debts, and paying your monthly expenses will take a lot out of you, so your retirement savings will take a lot longer than you think. Consider your employer’s 401(k) options or look into high yield savings accounts that will help you grow your funds little by little to reach your money goals.
5. Get Insurance
Insurance helps you ensure a more stable financial future. Decide which types of insurance are essential to your life and explore the most beneficial plans. Do you have health insurance through your employer? Great! You should still be looking at car insurance, home insurance, and even life insurance. Many companies can help you save by bundling certain types of insurance together, but doing your research will help you develop smart money goals.
6. Find Multiple Income Sources
Back in the day, it was enough to work a part-time job and pay your way through college or a 30-year mortgage. Today, even those with a high paying full-time job are struggling to make ends meet and manage their money goals. Costs of living are higher than ever and we need to keep up.
Holding a part-time or freelance job in addition to your regular position is one option. Earning from your 401(k) or other investments is another option. Any side job you can find, even if it’s just one time a week, can help!
Cash Factory USA
At Cash Factory USA, we’re here for you when life comes at you fast. With our financial advice and loan solutions, we can help you plan for the long term and during tough times. If you have any questions about our services or advice, reach out to us today!