Taking care of your financial future isn't something you can do all at once. Instead, it is a series of steps and decisions that you will make over a period of time.
1. Create a Financial Calendar
There are numerous financial tasks you should take care of regularly. However, constantly remembering to do so can be challenging, which is why it can be a smart idea to create a financial calendar.
Your financial calendar should include things such as paying your quarterly taxes if you are self-employed or when you should pull a yearly free credit report from each credit agency. It can consist of things such as creating an annual budget, reviewing your credit card spending, adjusting your W-4, adjusting your retirement contributions, and creating a holiday budget.
Having a calendar dedicated to financial tasks you need to accomplish throughout the year can hold you accountable for taking control of your financial future.
2. Track Your Net Worth
You should have an idea of where your net worth stands. Your net worth is the difference between your assets and your debt. Everyone has a net worth, even if it is negative. It is essential to know and track your net worth so that you can see the progress you are making towards your financial future. Your ultimate goal should be to have a positive net worth and to have it grow.
3. Understand How Interest Rates Impact Your Financial Life
Next, you will want to step back and consider how interest rates are impacting your financial life. When it comes to paying off your loans or credit cards, you may want to focus on those with the highest interest rate, as those are the accounts that are costing you the most. When it comes to your savings, you should be putting your money into the accounts with the highest interest rates. In that case, the interest rate is working to earn you money. Understanding these rates can help you pay down debt and save money.
4. Start Dedicating Money Towards Savings
One of the most significant changes you can make is dedicating a portion of your income to your financial future, around 20%. That money doesn't have to all go to the same place. For example, you can put a certain percentage toward building up your retirement savings, one portion toward retirement savings, and another toward paying off debt. Saving money and paying down debt shouldn't be an afterthought, rather, it should be a priority in your budget.
Taking care of your financial future will require you to take money matters seriously. You will need to dedicate time to financial tasks that will help you now and in the future. You need to educate yourself on interest rates that impact your financial life. You need to make savings a priority, not an afterthought. To do all of this, you can work with a financial advisor. Contact a financial planning service for more information.