Financial security is something most people want but few obtain. It's something that causes a lot of stress and frustration. In fact, for individuals in the U.S., personal finances and money is the leading cause of substantial stress. Over 40% of individuals worry every day about their finances and 34% have trouble sleeping because of them. The good news is there are things you can do to help reach financial security.
Ways to Achieve Financial Security
Some ways to reach financial security are:
1. Start Saving Money as Soon as Possible
Saving money at an early age is obviously better, but any time is as good as ever to start saving, even if you're reaching retirement years. Each penny you save will help you cover your expenses.
2. Contribute to a Tax-Deferred Account
You can reduce the urge to spend your retirement funds on impulse by contributing to a tax-deferred retirement account. Spending this money on impulse will likely lead to penalties and tax consequences.
Think about increasing how much you contribute to your tax-deferred accounts if you have sufficient income. For example, you could consider contributing to an individual retirement account (IRA) along with saving to your employer-sponsored retirement plan.
3. Tackle your Debt
Your income is your top wealth-building tool. But having debt will take away from your income. Not to mention, having to make a handful of payments each month can be stressful. Therefore, it's best to eliminate your debt as soon as you can.
A good way of eliminating debt is using the "debt snowball." This works like this:
- Make a list of all your debts, with the exception of your home. List them by balance (not the interest rate) from smallest to largest. Begin paying off your smallest debt first as you continue paying your minimum payments on all your other debt.
- Once you pay off your smallest debt, use that money that you were paying on it and add it to your payment on your next smallest debt and so on and so forth until you've paid off all your debt.
While this is an efficient way of paying off your debt, you might want to consider hiring a financial services company that focuses on offering a debt relief program. They'll work closely with you to learn your needs, understand your concerns, and come up with an individualized program that will help you become free of debt in as little time as possible.
4. Weigh in All Possible Expenses
When you plan for your retirement, you'll want to remember to include expenses for things like dental and medical costs, income taxes and long-term care. When deciding on the amount you should save for your retirement, list out every expense you might incur in your retirement years. Doing this can help you plan accordingly and make realistic projections.
5. Branch Out with your Portfolio
If you put all your savings into one investment account, you risk losing it and it could limit how much you get back. Therefore, allocating your assets is an important part of retirement management.
Too many individuals stress out over money, but this doesn't have to be the case. You don't have to let your fears, debt and stress keep you from achieving your financial goals. While there is no one true way that will allow you to achieve your financial dreams, you can create the life you want to live by getting an understanding of your money tendencies and having a financial plan. Seeking the help of a reputable financial services company is a good start.