Securing our financial future is the biggest concern for many. And yet, when the topic of finances comes up, many of us would rather talk about something else.
This is because most of the time, we don’t really know how to manage our finances and ensure a stable financial future. It requires a lot more than just planning and thinking about it.
To secure your future financially, you need to put plans in action and be consistent with them. In this post, we talk about 5 action plans to build a carefree financial future.
Set Financial Goals
It sounds quite simple, right?
When thinking about financial goals, you probably already know what you would want your future to look like. But it’s much better to put this on paper and actually list your financial goals.
But this is where many people make mistakes and set unachievable, unrealistic goals. These goals are in complete contrast to your current financial circumstances and are impossible to achieve. Also, many people set vague goals such as just saying they want to be rich.
Setting clear, realistic goals requires you to take a deep look at your current financial situation, your earnings, your spending, etc. Then, you determine what goals you would like to achieve considering all these factors.
For example, your goals could include reducing your monthly expenses, saving for retirement, purchasing a home, etc. Each goal should be carefully thought through and followed by an action plan detailing how to achieve that goal.
Reduce Your Expenses
Now that you have already set your financial plans, you need to start doing something about it. In order to save for a carefree financial future, you need to cut expenses whenever it’s possible.
Is there something you’re currently paying for that you could do without? Or are you spending too much money on little luxuries every month?
Reducing your expenses here and there can result in a decent amount of money you can save every month without even noticing.
We’re not saying you should completely deprive yourself of all the little pleasures such as your morning coffee or an occasional luxury, a trip, etc., but being careful about where you spend your money.
For example, buy only the things you need and limit yourself to one luxury per month. You could also eat out less frequently and start planning grocery shopping better.
Reducing personal expenses is different for everyone since we spend money differently. Figure out if there are many things you could be spending money on that you don’t need and try to cut at least some of them.
Get Rid of Your Debt
Building a carefree financial future is quite hard when you have debt. You could be saving money, investing, or growing your business but your debt will linger there and only grow bigger and bigger.
Whether it’s a high-interest loan, a student loan, or credit card debt, before you start planning for other things, you should first think about how to pay off your debts.
Devise a plan for paying off your debt by setting aside money each month. If possible, you should pay more than the minimum every month so that you pay off your debt faster.
Once you’re debt-free, you can focus on other things and truly work on building your financial future.
Save as Much as You Can
Needless to say, saving money is one of the most basic action plans towards building a stable future. However, it’s easier said than done.
Many people struggle with saving money because they feel they don’t earn enough or they simply spend money too fast and miss the chance to put money aside every month.
You can deal with this by setting money aside as soon as you get your paycheck. Remember that there is no specific amount that you should put aside so just calculate your expenses, your rent, bills, and other monthly spendings, and set aside a sum you think is reasonable.
If you do this every month and resist the urge to dive into your savings every time something comes up (unless it’s an emergency), then after some time, you’ll have a decent amount of money saved.
Hire a Financial Planner
Managing your finances can be intimidating and that is why so many people fail to plan their financial future. If all of this sounds too complex for you or you don’t know where to start, you could turn to a professional and hire a financial planner.
However, it’s important to differentiate between the various types of financial professionals out there and hire the one that’s right for you. For example, Opes Fidelio emphasizes some key differences between a financial planner and a financial advisor.
A financial advisor will sell you a product based on your current situation without really delving deeper into your financial future whereas a financial planner will consider every little aspect of your life to understand your goals as well as your current situation. They will also adapt them accordingly if and when your circumstances change.