Achieve Financial Security
We live in a world of consumerism. We hardly save for the future, and we drown ourselves with debt further inhibiting our chances of saving for the future. Here are some ways to secure your future financially.
1. Kill your credit card debts: Before you can truly save for the future, you must make sure to kill your debts, credit cards in particular, as they have the highest of interest rates. Money tied with savings account will not grow much given the small interest rates from banks. But killing your debt now will put a plug on leakages or your payments to high interest rates. Focus on those with high balances and high interest rates. Alot bigger amounts, not just the minimum, on your credit card with the highest interest rate. Alot the minimum for the rest. Make sure that each month you pay all your credit cards. As soon as you pay off one credit card, transfer your payment from that card to the next one with the highest interest rate. In this way, you will be able to pay that card faster. While doing this, resist the temptation to charge payments via your credit cards. Put them in a freezer.
2. Treat your savings as an expense: As soon as you pay off all your debts, treat your savings as an expense or simply put, pay yourself first. Alot a certain percentage of your take home income as savings that will not be touch. Build at least three to six months of your disposable income and call this your emergency fund. You can put this in money market accounts or in a high-yielding savings account that can be easily withdrawn once the need arises.
3. Live below your means: Do this with proper budgeting and by focusing on necessities rather than wants. Strive to spend less than your income so you can have the money to save and to invest in the future. Pay for required things for daily living and avoid luxuries. Reasses your spending and you will find areas you can improve on, say avoiding that soda drink, which you consume weekly.
4. Make money work for you: By proper investing, you will be able to increase your wealth. A few rules to live by though. First, do not buy an investment you can not understand. Chances are you will never appreciate it and may actually lose money from it. Second, invest only excess money. This is money you saved outside of your emergency fund. Third, diversify your portofolio. Do not rely on a single investment. Diversifying reduces the risk associated with investing.
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