34% of Americans have $0 savings, which is more than 70 million people.
Most Americans struggle with personal financial planning, whether they lack additional funds or simply don’t know how to budget. Some argue that they’ll start saving money when they get a better-paying job. The problem is that the more Americans earn, the more they tend to spend.
Sadly, this is why many Americans live paycheck to paycheck and retire with insufficient funds. So, how can we break this vicious cycle?
Keep reading to learn seven fantastic tips about financial planning you can action today.
1. Develop a Budget and Stick to It
Barely a week has passed since receiving your paycheck, and yet you’re broke. What’s even more worrisome is that you can’t trace back how you used all your money. You didn’t make any huge purchases, so where did your money go?
To overcome this struggle you need to learn how to budget your money. Use techniques such as the 50/30/20 budget rule to simplify your decisions. The idea is to use 50% of your income on needs, 30% on wants, and 20% on savings.
You want to have a means for tracking all your expenses and knowing where your money goes. By budgeting, it’ll become easy to get rid of frivolous expenses and save money.
To simplify budgeting look for various mobile apps and tools that you can use to track your expenses. For example, you can create a spreadsheet to input all your incomes and expenses. The spreadsheet will therefore make it easy to know where your money goes.
2. Seek Professional Help on Personal Financial Planning
Like most people, you may struggle with knowing how to create and stick to a budget. Whether you’re struggling to put money aside or simply purchase unnecessary items, there are plenty of ways to seek professional help and come up with a budget that works for all your needs.
See more here to find out what professional financial planning services entail. You want to discover who seeking these services will transform your life. The goal is to access practical advice to manage your money best, thereby avoiding debts and growing your savings.
3. Automate Savings
Manually depositing savings only magnifies temptations, causing you to struggle. Once you receive your salary, you’ll discover that you’ve numerous expenses, so you’re likely to postpone savings. That’s why you should look for ways to avoid these temptations.
One easy way of achieving this goal is by automating your savings. The plan is to have money automatically deducted from your account and deposited into the saving account. You’ll have no other option but to make do with the funds left after the deductions.
4. Increase Your Earnings
Despite your commitment to saving more money, you shouldn’t deny yourself the basic needs. Don’t force your family to eat low-quality food just to save money, or relocate to an insecure neighborhood to lower the monthly rent.
Are you wondering how you save money, when what you earn only covers these basic needs?
You can start by increasing your income. You can do this by advancing your education to secure a job promotion or applying for better-paying jobs.
Also, to grow your earnings, you need to learn how to make money work for you. The objective is to invest your money in things that’ll earn you a passive income. In the long run, you’ll have enough money to save and lead a good life.
For example, you can invest in the stock market and earn dividends.
5. Invest in a Retirement Plan
6 out of 10 Americans will retire broke. These Americans don’t have any savings and keep procrastinating retirement planning. They argue that they’ll start thinking about retirement once they get older but they never do.
To enjoy your golden years you should start planning for them when you’re still young. So, set your retirement goals and decide how much money to save for retirement. The plan is to decide how much money you’ll be putting away every month for retirement.
You’ll save the little money you’ve made and watch the magic of compound interest. The objective is to ensure that when you retire, you’ve enough money for your needs.
6. Buy Health Insurance Cover
As you research how to plan financially, you must understand that good health plays a key role. The problem is that despite your best efforts to eat healthily and exercise, you may still get sick. To protect your finances, you should invest in health insurance coverage.
Understand that hospital bills may quickly get out of control when paying out of pocket. Without insurance, you may find yourself exhausting all your savings by paying these bills. Having health cover helps you avoid this scenario.
Take time to compare different health insurance policies to decide the ideal one to purchase.
7. Start an Emergency Fund
When unforeseen expenses arise, such as your car breaking down, you’ll have to dip into your savings to cover them. The problem is that you’re most likely going to withdraw more money than you need. You promise yourself that you’ll refund the money once you get paid, but you’re less likely to do it.
The other alternative for meeting these unforeseen expenses is by borrowing payday loans. Understand that these loans are expensive and you risk falling into the debt trap. So you need to come up with a third way for paying for the unforeseen expenses.
And that’s why you should start an emergency fund to cater to these needs.
Leverage Personal Financial Planning to Lead a Happy Life
Proper personal financial planning helps you to save money and invest in your future. That’s why you should make an effort to educate yourself on how financial planning works. To expedite the learning process, search for the best “financial planners near me.”
You want to learn from these experts how to budget your money to ease tracking your expenses. Also, you’ll get professional advice when searching for the best savings account.
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