Along with the new year comes a new start, a chance to wipe the slate clean and to change our lives for the better. If you’re the type to make New Year’s resolutions, Billshark would like to suggest the following steps to take that can set you on the road to financial security.
1. Make a plan
When you interview for a job, one question hiring managers often ask is, “Where do you see yourself in five years?” If you consider your main job to be creating financial security for yourself and your family, you should be able to answer this question about your finances.
What are your goals: for 2019, for 2024, and for the rest of your life. Do you want to own a house or does renting make more sense for you? At what age do you want to retire? How much money will you need to enable you to do so comfortably? How will you accumulate that sum? Will you have money set aside for emergencies? For hobbies? For regular vacations? What does a satisfying lifestyle look like to you?
2. Take stock
If you don’t know how much money you have to work with every month, and what you spend where, you’ll never have financial security. You need to look at the big picture: income, expenses, necessities. Then compare that to your goals, and see how well the two match up. Are you better off than you thought? Worse than you’d hoped?
What changes will you have to make to help you achieve your financial desires? Get a better-paying job? Do you need to brush up on your skills to do so? Does that mean going back to school? Downsizing to a smaller house? Moving somewhere with better opportunities or a lower cost of living? Changing your investment plan?
Decide how to make your current and future employment and lifestyle mesh with your short- and long-term goals.
3. Pay down debt
Here’s a fun exercise: Take a dollar bill, set a match to it, and watch it burn to ashes. Was it painful to see that dollar go to waste? Paying interest on outstanding loans or credit cards is exactly the same, except with hundreds or even thousands of dollars every year.
For example, if you have a balance of $5,000 on a credit card at 14 percent interest and make only the minimum payment due each month, it would take you 22 years and cost you $5,887 in interest to pay it off.
Make a plan for getting rid of your debt any way you can, as fast as you can. Pick up side gigs, cut back on unnecessary spending, negotiate lower interest rates with your lenders, sell unwanted items ... whatever you have to do to get out from under your debt. (The wizards at Billshark are expert at finding you savings on your current bills, so be sure to check out how we can find you extra money every month.)
Trust us, you’ll feel as if a ten-ton weight has been lifted from your shoulders once these debts are gone.
4. Save, save, save
Before you even begin to pay down debt, however, save something for an emergency: car or appliance breakdowns, medical deductibles, taxes, evacuation in the event of a disaster ... all the unforeseen things life can throw at you. The latest figures show that 40 percent of Americans have less than $400 available in ready cash for these types of emergencies. Try to have at least that much on hand; $1,000 is better.
Once you’ve put that money aside, and paid down your debt, invest wisely. Max out your 401(k), or start an IRA or similar fund if your employer doesn’t offer a 401(k) or other sponsored retirement plan. Be sure to rebalance your portfolio at least annually, and try to shrug off the roller-coaster ride the stock market has been taking lately. Remember, you’re in it for the long haul, and—unless you’re nearing retirement age—eventually the magic of dollar-cost averaging will help you come out ahead.
5. Become financially savvy
Let’s face it: Most Americans know little if anything about how money works, and how to make their money work for them. Read a book, or many books. Take a class. Take a course. Think about how many Hollywood stars who made millions lost it all to dishonest managers or accountants because they didn’t understand their own finances.
Give yourself the gift of financial literacy. You don’t have to become as knowledgeable as Warren Buffet, but you should at least know how to protect and grow your assets.
6. Let us help
You’d be amazed if you knew how many sneaky—and unnecessary—charges the cable, wireless, satellite, Internet, and home security companies use to pad your bills. We know all about them, and how to negotiate with them on your behalf. We can end up saving you hundreds or even thousands of dollars every year. Click here to calculate your potential savings in less than 15 seconds. You can put the money you’ll save toward any of the above goals that can help secure your financial future.