Financial Resolutions — What They Are and How To Get Started
(RepublicanReport.org) – Most everyone has financial problems at times. Whether dealing with an unexpected expense or struggling to hit a monthly savings goal, there’s always some monetary issue to overcome. These are uncertain times with inflation at historical rates, but sound financial habits will still bring people a long way.
Whatever one’s financial goals are, planning and careful execution are key to achieving them.
Saving for a Rainy Day
No matter how financially stable people think they are, a rainy-day fund is always a good idea, as one never knows what’s around the next corner. The easiest way to start building emergency savings is to arrange for an automatic monthly transfer out of each paycheck to an account where savings grow without even thinking about it.
Preparing for Retirement
Saving for retirement offers an opportunity to make considerable savings in terms of taxes owed. Saving plans like the 401(k) or IRAs allow earners to make contributions from their gross incomes, meaning they don’t pay taxes on the monies they contribute to the plan each month.
Most workplaces have retirement savings plans for their employees where they can automatically set aside a portion of their wages for a contribution to a retirement fund. In addition, some employers will actually match what savers contribute up to a certain limit. For example, if employees contribute 5% of their salary, the employer may match the contribution by kicking in an additional 5%, for a total of 10% going into the employees’ retirement savings. That’s a total no-brainer!
So, if employees want to build a retirement plan quickly, they should set up regular monthly contributions and take full advantage of any company-matching contributions.
Sticking to a Budget
With online shopping and virtual payment methods becoming more popular by the day, it’s getting much harder for many people to ignore the impulse to spend rather than save.
For those who struggle with not having enough money at the end of the month, the first thing to do is track spending. Unnecessary items such as fancy coffees and expensive lunches can be eye-openers. Start with a contribution you can easily afford and increase it as you become more disciplined and pay increases kick in.
Learning to Invest
Interest rates are at historic lows, and inflation is rampant, so many people consider investing their money to keep it from losing its value. Beginning investors should focus on low-risk assets, such as exchange-traded funds and blue-chip stocks. Diversify and avoid putting too much money into risky stocks (like cryptocurrencies or penny stocks), which are almost a disappointment in the long run.
Paying Off Debts
The first step is adding up the amount of one’s total debt. Then, focus on first paying off the ones with the highest interest rates. If the debt is huge, focus on paying these off rather than saving, as interest rates for saving are currently negligible, and debt paid off is considered saving.
Remember, money not spent is money that can be saved or used to pay off high-interest debt. Regular monthly savings going into a retirement plan is smart, particularly if a company is matching contributions. Believe it or not, retirement tends to sneak up on people. The first step in the process is to be clear about goals, priorities, and spending; then, make a plan and stick to it. A disciplined approach has a guaranteed payoff.
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