Here are six tips to pursue a stress-free financial future:
1.) Create A Budget
Track your expenses, figure out how much you need to cover essentials, and identify where you can make cuts. For example, by not eating out as frequently, you might be able to save $30 or more a week.
2.) Prioritize Your Savings
With your budget in place, calculate how much is left for savings and set priorities. Consider the following:
- Stockpile an emergency fund that covers bills for at least six months. Better yet, have two to three years’ worth in cash or short-term investments.
- Make regular retirement fund contributions. Be sure to take advantage of an employer’s matching contributions—otherwise, you're missing an opportunity for additional retirement funds.
- Save for your kids’ college tuition.
- Sock away money for a vacation, entertainment, and other splurges.
3.) Make Savings A Habit
Pay yourself first with every paycheck by contributing to your savings account. The easiest way to do so is with automatic deductions.
4.) Capitalize On Compound InterestAlbert Einstein called it the “eighth wonder of the world.” Put your money in accounts paying interest, leave it there, and watch your interest potentially grow. Look at this example. If a 20-year-old saves $30 each week, that adds up to $1,560 a year. With a 1.04% annual return, that one year in savings will grow to $2,485 by the time they’re 65.
If they continue to make annual contributions of $1,560 for the next 45 years, they would have the potential for a grand total of $92,351, minus fees and other investment-related charges. Keep in mind that results will vary. The hypothetical rate of return used here isn’t guaranteed, and the example isn’t representative of a specific situation. And remember, all investing involves risk, including the potential loss of principal.
5.) Pay Off Credit Card Debt Every Month
Paying high interest rates on your balance is money you could otherwise be investing.
6.) Save Your Raise
As painful as it may seem, one way late starters can play catch-up is to put most of that extra money into savings. Unless you have been struggling to live on your current pay, pretend that the bonus or raise you received doesn't exist. Instead add it to your savings. If you don't have an adequate emergency fund saved, correct that by taking your bonus or raise and put it in your savings.
Start planning now. Work with a MAX Wealth Management financial advisor to plan for your financial future.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
To determine which course of action may be appropriate for you, consult your financial advisor.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
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This material has been prepared by LPL Financial, a registered investment advisor, member FINRA/SIPC.
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