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Personal Finance Goals You Can Accomplish This Year
Saving money for merely purchasing something is a passé. Whether you’re an eight-year-old wanting a new video or an adult who’s seeking your first grand house, we all have one way or the other tried to save up for something that is financially out of reach right now.
You must set a clear financial goal, like what you want to achieve, how long it will take, and the steps you will take to achieve it. Once you’ve recognized what’s important to you, you must figure out what is achievable in the long, mid, and term short. You should develop a tight budget and a SMART (Specific, Measurable, Achievable, Relevant, and Timely) strategy to achieve it. Begin by saving and monitoring your success constantly.
Financial goals are investment, savings, or spending targets you wish to achieve over a set time. The stage of life you’re in usually decides what type of objectives you want to achieve.
Here are few goals that will take control of your finances and help you make lasting changes this year and beyond. Choose to do a few of them, and you are ready to tackle them all. However, working towards your financial goals and having a plan to stick to them is the first step towards a healthier financial future:
1. Making a monthly spending plan
Online banking makes the management of family finances more manageable than ever. It might seem like a simple goal, but the first step in getting control of your finances is writing out a spending plan each month. If you write your budget each month and put the money you earn in a specific place, you will begin improving your finances. Writing your budget and focusing on where you spend your money helps get a better handle on where you are at the end of each month.
2. Writing down whatever penny you spend
This is a great habit. However, it’s not easy. You must physically write down each purchase you make in a diary in the first month to carry it with you everywhere. You are more aware of what you’re spending when you physically write it down.
You must consider moving to some app to track your spending as time goes on, and you get more comfortable with the process. Many budgeting apps let you enter each transaction as and when you make it. You can record it in the account to recognize your budgeting weaknesses and stick to your budget.
3. Sticking to your monthly budget
This is a challenging goal, but you should be able to stick to your budget when you carefully set it up and track it. As a rule, you must always spend lesser than you earn and put the extra money into savings. If you follow your budget diligently, you can definitely reach your financial goals.
4. Paying off debt
Make particular goals on how much debt you want to get rid of this year. If possible, you must try to get out of debt completely. However, you may not be able to do that as it depends on your income and the debt you currently have on you.
Set a goal and calculate how much debt you want to pay off this year. Then calculate how much money you’ll need to put toward paying that debt each month. You can quickly pay off your debt if you follow a debt payment plan.
5. Don’t keep adding more debt
This is a necessary step if you want to get out of debt. To accomplish this, you should try to stop using your credit cards and start paying in cash. You will have to commit not borrowing money, and then you may plan for significant purchases and make a dent in the amount of debt you possess.
7. Saving up for an emergency fund
The amount of emergency funds really depends on your present situation. You should have a smaller emergency fund until you pay off your debt if you are still getting out of debt.
If you are the primary breadwinner for your family, or your job is more volatile, you must aim at saving up at least three to six months of living expenses in your emergency fund. This will help you cover extreme emergencies without accumulating more debt.
8. Begin saving for retirement
You must contribute the amount that the company will match until you are out of debt if you have a full-time job. It would be best if you began contributing 15 percent of your income once you are out of debt. This will let you start building your retirement savings while freeing up some money to put into debt. You must consider contributing to a Roth IRA or a traditional IRA instead if you do not qualify for a 401(k).
This year you should do something to move forward in your career. Suppose you love your job, and you see yourself working there for the next ten years. In that case, you can still do something other than usual, improve your career stability, and plan the following steps, like applying for a promotion or continuing your education. If you are not happy with your present job, then perhaps it’s time to look around for a better-paying and more fulfilling career.
9. Setting up a financial plan
A long-term financial plan addresses your finances from all perspectives. This plan must outline a timetable when you want to purchase a house, retire or go for any career changes. It should also include a plan to build wealth and an investing strategy.
This plan will help you make better financial decisions over the next few years and be one of the most beneficial things you have ever done for yourself. A financial plan is more effective than just setting random financial goals without looking at the larger picture. Your dreams may differ and depend upon the fact that you are single or are married. However, no matter your relationship status but it is essential to have a plan in place.
10. Multiply my income and diversify my investments
Many people always look for a way to save money and control expenses. This is because they focus on how much money comes out of their wallets. However, the real problem is that they don’t consider how much money comes into the equation. It would be best if you looked for investments that help you in multiplying your money.
Begin now, even if you are new to investing. You do not have to be an expert or invest large amounts of money, but the point is to begin the process. It is time to take the next step and take few risks if you have been investing for a long time. Remember, you must go looking for other vehicles that leave you higher returns, and also, no investment is risk-free, but we have to be positive.
How To Choose A Financial Planner Who Won’t Rip You Off
Life is full of choices and their subsequent consequences. From choosing a stream of education, to pursuing a career, purchasing a home, and retirement planning, the choices you make now will certainly have a huge impact on your financial security and well-being in future.
One of the most crucial decisions for your financial well-being is choosing a financial planner. A top-notch financial planner will help you manage your wealth and become your champion, who you can look up to for questions and answers regarding your money. However, picking the wrong planner, may cost you a lot both financially and mentally
Planning your future often requires turning to someone you can trust as a fiduciary for guidance on college trusts, personal investing, insurance, income tax preparation, estate or retirement planning.
Most financial planners try hard to help their clients invest their money in things that generate rich returns because they accrue handsome commission on the positive returns. The more money they make for their clients, the more money they are will get for them.
However, there are some particular practices that some planners may participate in that to cheat their clients. If you are worried about that happening to you, you must be vigilant and look for warning signs when trusting your financial planner with your money.
Confirm about fiduciary duty
It’s clever to work with an Investment Advisory Representative (IAR) as they have a fiduciary duty towards their clients. This means they’re legally required to disclose any potential conflicts of interest and put their client’s interests first. You may think all financial planners are required to do so as it is the right and the ethical thing to do. However, that’s not true.
There are many firms that care more about earning a commission and selling products than helping their clients. This list includes some of the biggest names in the industry. A good financial planner will always put the clients first, and focus on managing his clients’ wealth.
Understand where the planner makes most of his money
Ask your planners to provide a breakdown to you about how and where they make their money. If they seem to withhold information or skittish then take note of it. Ask if they earn a commission through selling any products and understand the conflicts of interest as well.
There can be rightful reasons for your planners to earn commission by recommending a product. However, the product they’re selling should offer an excellent value and they must be forthright about the commission part. If you can quickly find a better service, product, or value that should raise a red flag.
Do they strive to know you better?
You can easily identify a sales focused company by merely observing their methods. If your financial planner is under a lot of pressure to rack up sign-ups, to sell certain products, you’ll probably notice it when talking with them. They’ll constantly try to push specific services or products, rather than learning about your goals and financial situation. At this point, it’s pretty simple, the products and services matter more than you do.
A financial planner who truly cares about you won’t start by pushing services or products. Instead, he or she will make an effort and take the time to learn about your aspirations and situations. Then, he or she will help you build a customized financial plan based on your needs, with this knowledge in hand.
First off, you must never grant power of attorney to your planner. However, specify in the power of attorney agreement that upon granting of it, your financial planner will only be permitted to trade your securities without informing you but he can never move assets from their original accounts or draw upon returns. Be cautious when entrusting your money to others, to protect your investments. Always validate your financial planner’s background, credentials, and ethics record.
Always remember that information from sales people, investment products and the media must be taken with a pound of caution and a grain of salt. You must never invest without forming your own opinion based solely on the facts provided to you and completing your own due diligence, as financial advices can be well camouflaged behind one’s own selfish needs.
Learn how to manage all the uncertainty surrounding the contradictory and conflicting financial advice so you can make informed decisions that are suitable for your independence and unique path to wealth. You will make smarter, and more profitable investment decisions after learning to sort good financial advice from bad.