Being Financially Aware And Organized
Although it is easier to bury your head in the sand and pretend there are no consequences, understanding your personal finances will help you make better money management decisions. Being financially aware and organized will help you to budget your money properly, avoid overspending, adequately save for college, and be financially prepared for retirement.
Live Within Your Means
Although that sounds like a simple concept, it is more difficult than ever thanks to credit cards, debit cards and Amazon Prime. Today, people can receive dozens of solicitations for credit cards on a weekly basis. It’s easy to succumb to the temptation and quickly find yourself thousands of dollars in debt. By understanding the role that credit cards should play in your financial health, you are much less likely to overspend, use the cards properly, and live within your means.
While debit cards and electronic payment apps have certainly simplified the buying process, they have also left us with a curious detachment to our money, making it much easier to overspend without seeing the immediate consequences. When cash was used for purchases we could simply look in our wallet and see our cash dwindling. We knew at that point it was time to stop spending. If you are going to use a debit card, be aware of how much income is in your account and keep track of those purchases on a daily basis.
With a click of a button almost any item can be delivered to your doorstep, often next day. Although this is a wonderful thing, it has diminished the sense of working for an item and waiting to obtain it. Instant gratification has become the way of this generation and it can be a dangerous concept in the long run. Before purchasing the items in your virtual cart, create a budget to determine whether you can really afford it or whether you should click remove.
By being proactive about our financial health, we can learn to live within our means and pay closer attention to the consequences of our spending, no matter how we pay for our purchases.
Save For Retirement
A new worrisome statistic shows that 22% of Americans have less than $5,000 saved for retirement. The root cause could be attributed to individuals either not bringing in enough income to be able to save for retirement or focusing more on spending every dime of income today.
Social Security benefits will not provide enough of an income to live a comfortable retirement. The average Social Security retirement benefit in 2020 is $1,503 a month. It’s vital that retirees have another source of income, whether it be from other retirement accounts, a 401(k), an IRA, or a savings account.
Lastly, Americans are living longer. In 1960, the average lifespan was 69.7 years. Today, it’s 78.7 years; an increase of nearly ten years. While no one is complaining, the fact is that because we’re living longer, we’ll need to save more money for retirement. The time to start saving for retirement is now.
Understand The Basics Of Investing
Be educated regarding the basics of how to invest money for your financial future. Years ago employees spent their professional life with one company and retired with a healthy pension. Employees had little, if anything to do with managing that pension and were not required to understand investments.
Today, aside from the public sector, the majority of businesses have done away with pensions, instead offering employees the chance to participate in a employer sponsored retirement plan such as a 401(k) plan. There, they’ll need to make decisions on how much of their money they wish to contribute and how to pick investment choices. For many, this task is as clear as mud. However, there are plenty of resources available that can explain the basics regarding diversification and asset allocation. Additionally, a CERTIFIED FINANCIAL PLANNER (TM) professional can review your personal financial situation and most specialize in creating a customized investment plan!
With more of the burden placed on consumers to make educated decisions about their finances it’s important to educate yourself properly. While it may sound daunting, financial literacy starts with a few easy steps such as creating a budget and tracking your spending. If you feel you can't tackle it on your own, find a CERTIFIED FINANCIAL PLANNER(TM) professional that will work with you every step of the way.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2022 Advisor Websites.