Scared of retirement? You aren’t alone. Some studies suggest that more than half of Americans are not going to be able to comfortably retire.
Being able to enjoy your twilight years starts now with your money management strategies. Sadly, many people fall victim to the live-in-the-moment FOMO culture of spending as they please. What should be your financial strategy to make the most of your earnings?
It all begins with making good habits and building financial assets. Let’s take a look at five financial management tips every person should live by.
1. Get a Retirement Fund
The most important thing you can do is contribute to a retirement fund such as a 401(k) or Roth IRA. These are tax-advantaged investment accounts that help you secure a decent retirement.
Make sure to contribute as much as you legally can each month. In most cases, the maximum contribution is $6,500 per year.
Retirement accounts are trustworthy, too, as your account broker has fiduciary responsibilities to you. Here is an example of fiduciary responsibility under Erisa.
2. Track Spending
It is critical that you keep close track of how you are spending, regardless of what that spending is. Don’t just occasionally open your bank app to see which transactions have cleared. Write down every purchase somewhere and keep a tally.
Credit card spending is notorious for making you overspend. Seeing what money is going out helps you to manage it.
3. Keep a Budget
Everyone hates being nagged about having a budget. Still, this is a critical component of wealth management. Your financial strategy is meaningless without one.
Keep strict control over yourself when it comes to excess spending. Stick to your plan and you will be able to stretch your dollars further.
4. Have a Rainy Day Fund
Always set aside money for those gut-punch black Sundays. You never know when the car is going to break down, or when someone will end up in the hospital. That money is going to be a nice cushion compared to going into deeper debt.
Consider putting this money in a place where it can generate returns. For example, store it in a high-yield savings account.
5. Treat Yourself Sometimes
The “treat yourself” attitude is no doubt the cause of many people’s debt. That said, it’s important not to view money as something that stays in your savings account all the time. You only live life once, so make sure you enjoy it from time to time.
Now, this doesn’t mean that you should go out and spend hundreds on impulse buys. Make these purchases in accordance with your budget. Most people allow themselves a sum of “fun” money that they can use for those non-essentials.
Take advantage of discounts and special offers to make the most of this fun money. If you are spending on travel purchases, then use your credit card points to get free money. Keep a thrifty mindset even as you shell out your hard-earned dough.
Find More Financial Management Tips
Simple financial management tips like these can go a long way to building your wealth. Simply opening a retirement account and keeping a budget covers half the ground already. While you are saving, though, don’t forget to reward yourself within reason.
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Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area.
