Building up a wealth of personal finance will not happen overnight and will most likely take many years of hard work and patience and discipline to achieve. It is never too late to start, the earlier the better. With a few adjustments to your current spending and saving free-for-all, you can get a solid plan in order to build savings that you will be able to enjoy in retirement years.
It Pays to Have Goals
Not only are having goals important, but that they are actually obtainable. You can’t aim for the sky with goals that you will fall short of right out of the gate, so strive for those you can actually hit. Try starting with building an emergency fund, with three to six months’ worth of expenses. When that is complete then work on maximizing retirement accounts, and maybe down the road take on an investment property when you are eventually that much ahead. It is definitely doable.
Stick to a Budget
Now that you are focused on improving finances, it is time to analyze every dollar that is coming in and going out. Take a look at bank and credit card statements to see all expenses, including monthly bills, necessary spending such as gas and food, and also taking considerable note to unnecessary spending that could have been avoided. Add up all of what could have been avoided and I would be surprised if you are not sick to your stomach.
Spend What You Can Afford
It seems like this should be common sense, but living beyond your means will only lead to mountains of debt. By creating a budget to now keep spending and saving on track, sticking to it will be most important, and also difficult. It takes discipline to minimize spending and maximize saving, so having the patience to see what works and adjusting for what doesn’t within your budget will be key to make sure the funds allotted are accurate.
Get Out of Debt
Taking out a loan or racking up the credit cards is a tough spot to be in. You are wasting money away in interest and barely chipping away at principal balance, especially making minimum payments on credit cards. Now only do you now need to work on paying off any debt you currently have, but also making life adjustments so that you will not continue to acquire additional debt while you pay the balance down, otherwise you will never get anywhere.
Live for the Future
Not that I am suggesting removing spending altogether and solely focusing on saving, basically taking away any fun in your life as it is today, but there needs to be a fine line of being aware of today’s actions with keeping the future in mind for retirement. The years will go by quickly and you do not want to wake up one day and realize you have nothing saved for the future. Between a company 401(k) account or an IRA, there are many avenues to begin saving now.
David @ Thinking Thrifty says
Having a goal is the very first step. I was such a spend thrift for so many years, never had any debt but didn’t have a penny to fall back on in emergency. When I sat down and got serious about my finances last year I couldn’t believe how much I could save each month with just a few simple changes. My main problem was I was the biggest excuse maker of all time, it’s all about your mindset!