When it comes to your finances it’s not only important to think about the present, but about your financial future. Many of us worry about financial security, whether that’s debts, retirement, or career goals. To ease the stress and make positive changes, what you need is to create a financial roadmap, to help you along your way.
1 . Focus on career development
When you’re planning your financial future, it’s helpful to view yourself as a financial asset. Taking the time to learn new skills and build your personal brand, will help you to develop in your career and increase your earning potential. It can be helpful to set yourself long-term career goals, and break these down into short-term aims. Whether it’s networking; creating a website; a vocational course; or a side-project, there are plenty of ways to supercharge your career.
2. Consider your retirement options
To improve your financial future it can help to consider your retirement options, and start paying into a retirement account early. There are several different types of accounts you might want to consider. A 401 (k) is one of the most common types of retirement account, and these are provided by your employer. Individuals can make pre-tax contributions, which then reduces your taxable income. When you pay into a 401 (k), your employer will match your contributions up to a certain amount.
A traditional IRA is another retirement account option, these are tax-advantaged plans, allowing tax breaks while saving up retirement funds. Any individual with an income can contribute to these accounts using pre-tax dollars. The tax-free funds grow until you withdraw your funds, during retirement.
3. Invest to boost your income
When you boost your earning potential, you’ll be moving closer towards financial freedom and security. Investing is a great way to boost your income, and there are plenty of options for beginners to get started.
A robo-advisors is a digital platform which offers algorithm-based, automated, financial planning. These platforms collect data about a client’s finances, using the data to offer advice and make small investments, on their behalf. As part of the service, client’s get education, portfolio management, planning and more.
There are plenty of other great options for beginners to invest, whether it’s through mutual funds, a certificate of deposit, or an investment app.
4. The right life insurance cover
Life insurance is a kind of financial product which allows you to leave money to your family, in the event of your death. Life insurance can be used as a support package for a number of years, to pay off your debts, or to cover lost income. The type of policy you take out will be dependent on your lifestyle, health and age. There are generally three types of life insurance including term life insurance, whole life insurance and universal life insurance.
Before you begin the process of setting up a life insurance policy it can be useful to read up on the questions life insurance companies ask. Doing so can help you to prep any documents or info that you’ll need to bring with you.
5. Create a backup fund
A simple but important idea, it’s helpful to create a backup fund, that you can use in emergency situations. First, return to your monthly budget, rework it, and make any cuts that you can. Determine how much you can afford to put aside each month to create an emergency fund. A backup fund should only be used when absolutely necessary, to support you through an unexpected financial set back.
6. Improve your credit score
Improving your credit score has many benefits, and these benefits may help you to get closer to financial freedom. A few of the benefits include:
*Lower rates: Having a good credit score means you will qualify for better interest rates on loans and credit cards.
*Better car insurance rates: With a good credit score, you’ll be able to get a better deal when you’re applying for car insurance.
*Better deal on your mortgage: When it comes to buying a house, you’ll need a good enough rating, in order to get a mortgage. Good credit ratings generally result in better mortgage deals.
There are plenty of ways you can look into improving your credit score, from reducing your debts; to paying your bills on time; and by reducing your credit applications. With these six tips, you’ll start to improve your financial health and help you and your family to feel more secure.