Setting Financial Priorities and Saving For The Future
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on Wednesday, November 3, 2021
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Education
Planning for the future is important particularly when it comes to finances. Financial planning can help you meet your financial goals by effectively manage your income. Now is a great time to examine your financial priorities and to start saving for the future.
Financial planning is critical in helping to determine both your short- and long-term goals and how to achieve them. Without it, you could end up overextended on current expenses or unable to fulfill your retirement plans.
Sorting out your financial priorities is the first step to financial planning. Once you know what’s most important to you and what you want to achieve both today and in the future, you can start creating a plan to achieve your goals. While everyone’s situation is different, the following are five general priorities that fit most people and can serve as a good starting point.
- Review your budget — A budget can be a powerful financial tool as it is a guide for how much money you can spend each month once you’ve satisfied all obligations and contributed to your savings. As you review your budget, look for ways you can cut down on your spending. Even small adjustments can make a big difference over time.
- Create a fund for immediate obligations — Once your budget is updated, you will have a good idea of how much you need to cover immediate obligations — mortgage or rent, utilities, groceries, etc. Consider creating a specific fund at your bank to keep the money you need for immediate obligations separate from the money you use for other expenses and what you put in savings.
- Create an emergency fund — With life, you should always expect the unexpected. That’s why it’s important to create an emergency fund that you contribute to each month. This will help you pay for unexpected expenses, such as car maintenance or medical bills.
- Pay off debt — Eliminating debts is a great way to reach your financial goals faster. Money that was allocated to loans and credit cards can then be redirected to financial priorities. Focus on paying off as many debts as you can, so you can contribute more to savings and other priorities.
- Review retirement savings plans — One of your financial priorities should involve a retirement plan. Whether it’s a 401(k) or some other type of individual retirement account, make sure you’re contributing as much as you can manage to build up savings that will allow you to retire comfortably when the time comes.
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