The following article is a guest post.
These are rough times. People are graduating with tons of debt, almost no job prospects, and no financial security whatsoever.
Past generations used to consider owning a home as a rite of passage to adulthood, but now you’re kind of lucky to be able to rent something that wouldn’t take a huge chunk out of your measly monthly salary.
Everything might sound bleak at the moment, but there are still a lot of things you can do to be able to secure your financial future.
Here are 7 steps to get you started:
1. Save Early, Save Now.
It might seem like a no-brainer, but there are still lots of people who live paycheck to paycheck, with no savings to fall back on in case their current living situation goes awry.
You wouldn’t want this to happen to you.
Though current financial dogma says that you should save at least 20% of your monthly income, this isn’t always possible.
Try to start out small. Save just any amount every month, no matter how small it is. Then gradually increase it if you can.
Having money saved in the bank can not only get you out of sticky situations should they come but also give you peace of mind.
2. Invest In Yourself.
Your financial future is also highly dependent on your ability to make money.
Your earning potential is what you would call a human capital. The more you invest in it, the more your chances of getting something out of it in the future.
So, how do you increase your human capital?
Answer: Invest in yourself.
Read. Learn a new skill. Take up courses to hone your old ones. Continuously improve yourself.
Your knowledge and skillset are among your life’s greatest assets.
3. Have an Investor’s Mindset.
Some people earn a lot but don’t know what to do with their money. Some people don’t have money but know how to invest.
Earning money and investing money are two entirely different skills. If you’re good at making money, you still need to have an investor’s mindset if you want to make the most out of what you earn.
So learn everything you can about investing. Know what compounding is (it’s when you make your money work for you and that you can invest and grow it) so that you would be able to accumulate your wealth a.s.a.p.
4. Keep Loans To A Minimum.
Loans are essentially financial baggage and can ruin your financial future.
Leave a couple of installment loans (you can easily get installment loans from mtploans.com) unpaid for a couple of months, and you’re bound to run into a few problems that could give you a crippling headache.
The fact that they’re easy to acquire further exacerbates the problem that people have with loans.
However, in this day and age, taking out loans can be necessary.
Should you need to acquire a loan, make sure that there is:
- a good reason for you to do so, like paying for hospitalization or your kids’ tuition;
- logical sense behind it.
If you’re buying a car or a house, it makes great financial sense for you to use loans (provided that you can afford the monthly payments, of course).
5. Have Short-Term and Long-Term Goals.
Keep your goals in your sight so that you can track them and take note of the progress you’re making towards their actualization.
A short-term financial goal usually doesn’t take too much capital and has a relatively short investment horizon. An example of this would be spending for a car or paying for a two-year graduate degree.
Long-term goals are often related to major life stages like retirement, marriage, and children. These have longer investment horizons and cost way more than what you would spend on short term goals.
6. Formulate a Financial Plan.
You can use a tool or a financial planner to make a financial plan. This plan can help you keep track of every financial aspect of your life, and can also help you realize how much and for HOW LONG you can invest for you to reach your financial goals.
An emergency fund should be at least six months of your current salary. If you still don’t have one, better start building one up right now.
This fund will only be used only when it’s necessary to do so. It can keep you out of sticky financial situations, and help keep you afloat should anything bad happen to you, your family and your finances.
Hopefully, the tips above gave you a general idea on how to secure your financial future. It’s hard, but it’s entirely doable and can be achieved with the right mindset.
Full-time freelance writer. Lifestyle designer.
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