Thinking about the future can be nerve-racking for a lot of people. One way to ease this stress is getting financially stable before you have to actually start thinking about finances. Gaining knowledge about your options to organize your money is the first step. Then you want to have money saved or know what your expected income will be in the future. This will help you know how big to think. After you have a good idea about the amount, you then need to focus on where you will be using and spending this money. Do you want to have it in a bank? Do you want to invest? Will your expenses take most of it? These are questions you need to answer. Here are a few quick tips to get you thinking about planning your finances:
1. Start thinking in short-term AND long-term goals with your money.
It’s easy to just plan for the next two weeks but what about the next month, three months or years? If you know where you want to be in five years, use this to your advantage. Start investing in mutual funds or even retirement and insurance plans so you’re set up. If you don’t know where you’re going to be, start looking into stocks and how you can create equity with what you have in your savings account.
2. Do your research.
If you are looking into stocks, look at them over the past years to see how stable or unstable the company has been. If you’re more into risk-taking (or stability) then your decisions will differ with each company. If you want to start planning retirement, look at whether a Roth IRA or Traditional IRA will work best for you. While doing this research, make sure to not get stuck in a “right now” mentality. Don’t think what you are making currently will always remain the same, hopefully, there will be continuous income growth each year or every 5 years.
3. Ask people.
Don’t be scared to go find financial advisors that offer free first-time consultations or that family friend who worked in a bank a couple of years ago. The only way to make smart decisions about your finances is to be educated about what you’ll be doing. You can’t expect to become a pro at something you’re not familiar with. Asking people can only be beneficial, but be cautious about the advice they give and take into account their financial standing. If you ask the right people you might even impress them and they can give you more information (or investment opportunities) that they otherwise wouldn’t have given you.
These three goals can seem trivial on the surface but using these will help you start planning smart. People can say they have their finances or life planned out but if they aren’t attainable goals, or are poorly thought out, none of it will be of any use.