Finances can be a big source of stress for families. In fact, financial disagreements is one of the leading causes of divorce. Taking control of your financial future now can lead to a lot fewer headaches down the road. But you’ll need to know what your financial goals are in order to reach them. You’ll need to get in the habit of planning for years in the future, which is something that unfortunately isn’t taught very well in schools. The good news is that you can start setting good financial habits now and reap the rewards later. Let’s talk about how you can take control of your financial future and start saving more.
Make A List Of All Your Debts
You can’t save money if you don’t know how much money you owe! The first step to financial freedom is to make a list of all your debts. Once you have a list of your debts, get to work on paying down the accounts with the highest interest rates. You want to make sure that you start paying on those first, because the accounts with high interest rates will cost you more over the long run.
Begin Setting A Budget
Setting a budget is key to saving money and paying down your debts. You have to pay for rent, food, and insurance. After that, there are plenty of expenses that you can cut down on, especially entertainment expenses. By eliminating some of those extra television channels you never watch, you can start saving extra money that you can use for your future.
Start Saving, Or Even Better, Start Investing
Saving money is absolutely critical to your financial future, but most Americans save less than 5% per year. Have you evaluated your budget and seen where you can save more money? Once you have, commit to saving a set percentage of your paycheck every two weeks. Maybe that number is 10%. Maybe it is 8%. The higher the better, as it will give you more options in the future, such as if you’d like to go back to school or to start your own business. You don’t have to park your money in a savings account either. There are a tremendous amount of low cost low risk financial instruments that you can invest in. Index funds that track the S&P 500 are a great example of a way you can get broad exposure to the market without paying high fees or risking big losses.
Get Rid Of Your Bad Financial Habits
Now that you know how much you owe in debt, and have created a budget, you can start getting rid of poor financial habits you have. Maybe you lend your friends money and don’t necessarily ask to get repaid. Maybe you spend way too much money on lottery tickets. Or maybe you’ve taken out one too many credit cards. Start working on reducing those bad financial habits and you’ll be surprised how much money you’ll have saved up.
Regina Fasold is a seasoned Executive Coach and Leadership Expert. Her extensive professional background and her 10+ years of experience as a Global Executive Coach have allowed her to assist over 300 senior executives in corporations throughout the United States and in over 25 countries around the world.