Financial planning is essential to have a stable and secure life post retirement. Some advice is worth your attention, while others are worth ignoring. Yet many people tend to ignore good financial advice for saving to plan their retirement. Therefore, they have to deal with a lot of problems once they retire since they haven’t made investments in any pension plans. Here are some important financial advice that people tend to ignore:
Best financial advice for life that most people ignore:
The following are few best life advices that people should not ignore.
1. Start saving for retirement as early as you can:
This is a common suggestion that you may have heard from many people but you tend to ignore. However, ignoring such an advice is not a wise thing to do. Once you start working, you have employment benefits and can save for your retirement plan. So, you aren’t going to face any type of financial hardships. There may be situations such as inflation and cost of living and social security may go up. If you do not have a proper plan to deal with such a situation, then you may face a lot of financial problems. Therefore, once you get a job, your main aim should be to save a sizable amount of your income. This will not only help you to plan for the future but also help you to deal with economic problems such as inflation. So, follow savings plans from the very day you start working.
2. Contribute as much as you can to a retirement fund:
A retirement plan is very important, especially in the modern scenario where few jobs have pension and security. But in order to have a secure future, you should invest as much as you can into a retirement fund. It can prove to be beneficial if your employer contributes a small amount of money to your retirement plan. It is a kind of money which you will be getting as free, and so you cannot ignore. This will prove to be even better if you feel that you are being underpaid since it is your first job. By contributing to your retirement fund from the very beginning of your career, you will be able to save a substantial sum. So, it will help you to meet your expenses once you retire from service life. You will thus have a safe and secure future personally.
3. Make additional savings also:
Apart from depositing in an emergency fund, you need to make additional savings as well. You may need to make savings for quite a few things like children’s education, healthcare expenses etc. It is up to you to find out what you will be saving for, but having a good sum as savings will be very useful in the long run. You may require money for a family vacation or for many things which you don’t have to pay for in normal circumstances. By saving a good amount of money, you will be able to make sure that you have peace of mind. Therefore, plan the exact amount of money which you will be able to save on a monthly basis. Plan your monthly expenses accordingly to make sure that the amount you planned is saved each month.
4. Clear of all your debts:
Make it a point to clear all your debts. Incurring debts is not a wise thing to do. It can cause a lot of hardships to you in the long run. Therefore, make it a point to clear all the debts. Avoid buying those items that you cannot buy in cash. You can think about saving only after you have made sure that all your debts have been cleared. The sooner you are able to pay them off, the higher will be your peace of mind.
5. Have a clear idea of the difference between good debt and bad debt:
There are many people who do not agree that there is something called bad debt, but there actually is. It is not possible for everyone to pay for an apartment in cash, so the mortgage is regarded as a good debt. A car loan, on the other hand, would be considered a bad debt. Such a debt will never ever generate any credit for you and is, therefore, worthless. In contrast, a house is a good debt which will acquire good value over time. Therefore, you will need to know the difference well and make sure that your good debts are higher than your bad debts.
6. Pay off your credit card bills on a monthly basis:
Make it a point to pay your credit card bills on time on a monthly basis. This will ensure that you don’t have to pay a higher amount after the due date when interest is accrued on the outstanding amount. There is no harm in having a credit card, but you will need to pay off the amount due in full every month. A credit card can help you pay for the items you buy, but its always wise to clear your dues within time. This is the only way through which you can maintain a good, clean record. By paying off your credit card dues on time, you will be able to make sure that having debts doesn’t become a way of life.
7. Going slow and steady can work for you:
This is something that many people do not realize. But it is the tortoise who always wins against the hare. This happens because despite being slow, the tortoise is steady and alert throughout the duration of the race. The hare, on the other hand, is fast and reckless. There is no scheme through which you can become rich overnight. You need to plan with care, make savings slowly and pay a good deal of attention while paying off. There is no way that you will be able to save a large sum overnight. Therefore, add your savings month by month. As the interest accrues, you will be able to collect a large sum which you can use to meet your household and medical expenses once you retire. So, you won’t have to depend on financial assistance from your family members. Therefore, it will be possible for you to remain free from economic hardships once you retire.
8. Save in an emergency fund:
Saving at least $500 a month as savings is essential since you do not know what type of economic crisis you can come across in the future. Issues such as sudden illness of your family members or repair of a damaged vehicle or a new washing machine you bought are likely to lead to additional expenses. Imagine that you have no money in order to pay for all these expenses. There would be nothing that you could do in order to deal with this type of emergency situations. Therefore, make sure that you save a part of your income in an emergency fund. As a result, you will be able to deal with crisis situations in a better way. You won’t have to incur debts in order to pay for such issues if you have a sufficient amount as savings in an emergency fund.
9. Saving small amounts is better than saving nothing:
You can save on a monthly basis if you plan your finances well every month. There are a lot of people who fail to pay their bills every month and they fail to make any savings. But there are people who happen to be spendthrifts and spend money without any sort of planning. It’s not that they cannot make any savings, they actually don’t want to. If you don’t have a habit of saving, then you can start by saving a small sum every week. Save $5 during the first week, $10 during the second week, $25 during the third week and so on till you save a large sum. This is a quick and very effective way of saving your money. Once you start doing it, saving will become your second habit. Therefore, even if you save a small amount, it would be better than saving nothing.
10. Stop wasting money without future plans:
There are many people who have a habit of spending without any plans for the future. You can stop leasing vehicles when you spend a substantial amount on its maintenance. Instead, drive your own car. Avoid buying a new vehicle every 3 years and stop wasting on such luxuries. Age-related complications may make it essential for you to opt for a health insurance. Buying an insurance policy won’t be possible if you do not have adequate savings. Your children’s educational expenses will also rise as they finish high school and enroll in university. Therefore, you will have to cut down on unnecessary expenses. Plan your monthly budget in advance and make sure that you spend only on essential household items. Cut down on things which are considered as luxuries. This will help you to cut down on unnecessary spending.