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Planning Tips To Strengthen Your Financial Habits

August 06, 2020
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A Financially Secure Life Starts with Sound Financial Habits

1. Understand Your Debt to pay down student loans and credit cards more effectively

2. Establish Credit for lower costs on future purchases and loans

3. Set Up an Emergency Fund to pay for unplanned events

4. Protect Yourself with insurance for a safety net against the unexpected

5. Save and Invest small amounts to help reach your goals

6. Maximize Employer Benefits to make the most out of your salary package

7. Prepare for Retirement by getting started early which can make a big difference over time

8. Use a Budget to make the most of your income and to better manage your financial resources

9. Create a Solid Plan to work towards immediate and long term objectives

50-30-20 Strategy for Budgeting

Consider the 50-30-20 strategy to help you better balance the wants and needs in your life so that you can make the most of your income. The strategy divides your after-tax paycheck into three areas:

50% goes to “needs”

Needs are the items that are essential to live each month. This can include your mortgage or rent, utilities, groceries, minimum payments on loans, credit cards, etc.

30% is for “wants”

which are your lifestyle choices. This is everything not needed to live but rather makes life more enjoyable. This can include cell phone, cable, dining out, vacations, etc.

20% towards savings and debt

These are financial priorities such as your emergency fund, extra payments towards loans and credit cards, etc. Start small but aim to increase this amount over time.

Understanding the differences between needs and wants as well as making smarter spending decisions can make a big difference on where your paycheck goes. Increasing the allocation to the savings and debt amount can help you pay down your loans and credit cards more quickly while growing your savings.

Budgeting and planning for the future can seem overwhelming, especially if you’re starting out in debt. But the good news is you’re taking an important step. Talk to a financial professional who can help you build a plan tailored to your objectives and financial goals.

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