It’s never too early to start financially preparing for your future. It doesn’t matter if you’ve just graduated from college, are mid-career, or you’re planning to retire in a few years, you should start thinking ahead to make sure your transition from working to retirement is seamless and that you’re prepared for what might come up. You want to live a comfortable, financially secure life and that requires some preparation on your part to ensure you’re ready in case of unforeseen circumstances or retirement. Here are five ways to prepare financially for the future starting today.
First, create a monthly budget
Your financial freedom starts at the monthly level. If you’ve never created a budget and let your finances come and go without much foresight, you’re probably not prepared financially for the future! One unexpected event can set you back months in terms of income; that’s why it’s necessary you start with the basics of financial planning.
Creating a budget for monthly expenses is easy. First, write down all of your necessary expenses like rent/mortgage payment, utilities, and transportation costs. Then, write down how much you spend on entertainment and other things each month. Be honest with yourself about how much you really spend! Finally, subtract these two calculations from your total income. You should have money left over after all other expenses. If you don’t, you should reevaluate how you can make cuts in spending throughout the month.
Start paying down debt
If you’re busy paying your credit cards every month, that’s more money given to the bank and less money in your pocket. It’s hard to save for the future if you’re overwhelmed with credit card payments. Start actively paying off your debt, so you can free up money and direct it towards your future. Focus on the accounts with the highest interest rate first and pay each card off in full one by one. Once you’ve paid off your credit card debt, do your best to avoid paying for things with credit and use cash instead.
Begin actively saving your money
You’d be surprised how many people don’t have an active plan for saving money. Being prepared for the future is as simple as saving money each month. Keep a separate savings account for your future and dedicate a percentage of your income each month to this savings account. Remember, this account isn’t for fun spending or anything frivolous; it’s a safety net for the future. Having this savings account is the best way to be prepared for anything life throws your way.
Create a retirement plan
You should prepare a retirement plan early on and stick to it if you want to live comfortably knowing your retirement is settled in advance. There are a lot of government and employment programs that make it easy to prepare for retirement, whether you choose to set up a 401K through your employer or a Self Managed Super Fund. You can learn more about Self Managed Super Funds (SMSF) here: https://www.baggetta.com.au/smsf-guide/ and decide if they’re right for you. Speak to a financial planner about the best way to prepare for your retirement.
Finally, change the way you think about money
It’s easy to get swept up in the feeling that you always need to buy the newest, most expensive things to keep up appearances. Change your outlook on your finances. Realize you don’t need to always buy new things or go on lavish vacations to feel rich. Having a financially secure future is worth a million new iPhones! Let yourself truly enjoy the things you have without feeling like you need more and more.
Stay proactive to ensure your financial future!
If you don’t have a financial plan to save money, you can easily get in a bad situation where you’re struck with an unexpected crisis or expense. That’s why it’s important to stay vigilant about your financial future by saving today and having a plan in place for retirement. If you’re proactive, you’ll be ready for anything life throws your way!