The Financial Planning Association recently performed a study focused on young investors , finding that 77% of respondents who felt financially secure were also experiencing lower stress levels. The importance of this potential connection between your financial security and your emotional well-being should not be understated considering that, if your daily stress levels go out of control, you can experience a plethora of physical and mental risks.
So here are some simple ways that you can better prioritize your financial well-being, ensuring that your finances are never a source of additional stress throughout your day to day life.
Write Down The Financial Goals You Most Want To Achieve
In order to know where to go, you must first know where you are going. That’s why getting specific about your goals from the get go is so important – else you’ll be running around in circles. So start off by thinking about some of your achievable financial goals. Is there a certain amount of money you want to have saved up? Is there something specific you want to save up for? If so, how much do you need to save up?
Once you figure those things out, map them out on a timeline. Which ones are long term goals vs medium term goals vs short term goals? Which goals can you set deadlines for? Set those deadlines, and now you can begin the process of reverse engineering them down to the exact dollar amount you need to be putting away each day on average to achieve that financial goal.
Stick To A Realistic & Sustainable Budget
The process to doing this right may be boring if you don’t like looking at numbers much, but it’s crucial towards achieving your financial goals and attaining financial security. To start, you need to know exactly how much money you have coming in each month, after taxes. You’ll then want to figure out exactly how much you spend each month on basic and common expenses such as rent, internet, utilities, car payment, car insurance, etc. Don’t include food in that list though since this is one that can vary, and that you have some control over.
Once you have that answered, what’s left can go towards your food for the month, as well as towards your savings, investments, and miscellaneous things you may want to purchase throughout the month. This is where you’ll want to start thinking hard about how much to allocate towards each thing.
When doing this, make sure to be realistic, and keep sustainability in mind. Similar to dieting, being too strict for too long can result in you breaking away from it after a while and letting a bit too loose. In dieting, this might mean eating 2 whole pizzas and a gallon of ice cream in one day after sticking to a strict keto diet for a month. With budgeting, it can mean dropping $500 in a single weekend out with friends after 2 months of not spending any money out with friends. Sustainability is key.
Be Wise With Debt
Keep track of all the debt you may already have. Prioritize paying off that debt, with extra focus on the debt that has high interest, as well as the debts that have the biggest impact on your credit score, such as credit card debt.
You’ll also want to think long and hard before taking on new debt. Unless you’re 100% certain you’ll pay if off with ease, there’s room in your monthly budget for the payments, or it’s something that has enough potential upside to counter the negatives of taking on debt, such as taking out a loan to start or expand a business venture, then it may be best not to take onto the debt.
Invest In Yourself & Your Future
Set aside some money each month to put into investments. What you invest in is up to you, but it’s good to make a habit of putting money aside for that purpose. If your employer offers a 401(k) match, make sure you sign up for it and contribute enough to get the full match. And don’t forget to roll over any old 401(k)s you may have from previous employers, or at least set up a separate investment account to help you keep track of all your savings. It’s all about making the financial decisions today that will ensure you don’t encounter financial hardships in your future.
Live A Debt Free Life
Getting all your debt payed off is a phenomenal financial achievement. But it can also be one of the most difficult financial goals to accomplish. This is why we offer our Debt Free Life program to our clients. This program allows you to harness the power of the cash value of a life insurance policy to pay off your debts, giving you protection through the life insurance coverage while slowly moving you towards your own debt free life.
Your Eidelon Insurance Agent can help you in putting together a fully customized plan based on your budget and financial situation so that you can get on track to achieving your financial goals. To see how our Debt Free Program can work for you, fill out the form on our Contact page.
This article is written for informational purposes only and should not be taken as financial advice. For a detailed consultation regarding Debt Free Life, please reach out to your Eidelon Insurance agent.