Planning to buy a home one day? Travel the world? Stop working and just sit on the beach, sipping a pina colada? You can get there—if you map out a realistic spending (and savings) plan, and keep an eye on your daily transactions to ensure you’re sticking to it.
Technology makes staying on the right track completely mindless, especially when it comes to automation. You can automate bill payments to eliminate any excuse to be late, plus contributions to your savings and investment accounts and even debt payments to reduce your burden as quickly as possible.
One of your first savings priorities should be to create an account dedicated to emergencies, like a high vet bill or car repair. Though Hutchinson recommends an ultimate goal of six months’ worth of living expenses, start by working toward one month’s equivalent and go from there.
If you’re not contributing to a 401(k) or IRA plan, start now. The longer you have to save before you need to access your cash, the more you stand to benefit from the power of compounding (returns on the money you invested, plus returns on your returns).
Whether you’re heading to the grocery store or to the mall, scribbling down a list will help you save money by avoiding those tempting items that seem to call out to you in the store, but that you don’t actually need.
Every month, take your financial pulse, Hutchinson says. Are you living on close to 80 percent of your income? How many months’ worth of living expenses are currently in your emergency fund? Is there anything you should do differently next month?
Understand the process of evaluating your risk profile.
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