Saving Money
The benefits of getting out of debt will allow you to free up your money resources. Instead of paying interest you can use your money more efficiently and allow you to invest in products or services to improve your life. You can even use this extra money to help others or build up your assets. Before you go out and spend the extra cash flow you have worked hard to attain through making wiser and smarter decisions, be careful not to spending the money on luxury items or some useless gizmos because it will only lead you back to poor financial habits and status.
Since life is full of unexpected events and we are not able to predict the events that will take place, it is a smart idea to save money for a rainy day. Just because you have a routine or schedule set, does not mean you can control your day all the time. There are things that could happen such as a flat tire that could alter your day. Having some extra money tucked away in your emergency fund will help you deal with unexpected expenses that happen. Instead of borrowing money and charging your credit card, you can avoid having a credit card balance and needing to use it to handle the issue and bouncing back will be a smoother transition.
Even if you plan on using extra cash flow to start a business or invest your money elsewhere. You should allocate to savings in case you need money for emergencies, you wouldn’t have to break your piggy bank to make it through unexpected expenses. It would be a wise idea to have multiple piggy banks or accounts for the things that matter most to you in life.
1)Save for the future, Emergency Fund(3 months, 6 months, 1 year)
Having a separate fund or account for the things you want to add into your life is a smart way to limit your desires and control your money. Instead of having one general savings account you can have multiple accounts for emergencies or vacations, a new car, or house, gym, or fitness, education. having your money in one account can put very thin lines between your funds and you might divert funds you intend on spending on one and using it for another. Think of your vacation fund as a seed you were planting and depending on how much you nourish it will determine how much it grows. It will allow you to determine how long it will take to become matured and ready for you to use, three months or one year for you to use the fund for its intended purpose. Do this for all the things that are important to you in life and have about 1 to 5 accounts starting off and after you see that it is working for you and you were successful at it you may have more of it if it is within your means.
I recommend people to work on building the emergency fund first because this is just one account and it will help you build discipline and build your savings habits. Also with only one fund to put money in you will build it up faster and it will help you determine how many funds you should have at one time. Every single person is different so each individuals spending habits are different so what works for one might not work for another, so it is up to you to assess and figure out what is in your means and your capabilities and what works for you. There is nothing wrong with wanting the best but being realistic and figuring out if it is viable or if using the money elsewhere would be better. Your emergency fund should have enough money to pay your expenses and liabilities for the next three months to one year. This will build your savings muscles and open opportunities for you. Whenever you feel deterred to save and feel like indulging think of what ever fund you could use the money for and picture it as realty so you are more inclined to save rather than spend.
2)Savings Account for Investments,Vacations, College Funds for Kids and Education
Once you have your emergency fund in order, try to figure out what it is you truly want in your life to improve the quality for yourself or ways to better yourself. What is it that you want in your life, what will bring you happiness and satisfaction? For example if you are saving for education, picture yourself getting this education and getting the promotion at work or the new license you need, or the certification in the field you want to work in. Whether it is for you or your kids, if thats what they want to do and need your help.
Picture and imagine going on a vacation to the destination you always wanted to or enjoyed going to. Reward yourself for your hard work in an efficient and thought out responsible way. With the proper funds in place if you decide to go on a one-month vacation you don’t have to worry about your bills because you can cover them.
The same goes for when you decide to start a business or invest your money. Most businesses don’t turn a profit in the first year of operations. Usually small businesses fail within three years because of poor planning and inability to handle changes and not having enough savings or money to survive the expenses. Having this one year of emergency fund or investment fund will help you focus on your business and investment without having to worry about running into money problems. You can focus on contributing to your business by being able to use your time to build a good foundation for your investment plan or business ventures.You can ask for time off your regular job because you have the funds to pay the bills and cover some extra expenses when they pop up.
Insurance for Yourself, Loved ones and Personal Items
Having the proper insurance will also help cover the unexpected expenses in your life. Life is full of unexpected things so although we do not want them to happen, accidents happen and could leave you medically, financially damaged and it could even be worse. If you are the provider for your family and you take care of all the bills, leaving your family with no protection or insurance can make the situation even worse. So investing your money in a life insurance plan would be a wise choice. There are even life insurance plans that have a built-in savings account so they help put some money aside for a rainy day, it’s not the most return on investment from your money but having the plan will give you a peace of mind for your family and future.
Insurance for your car and home are mandatory in most states, however although it is an extra expense call your broker and find the best package for bundling your services together. Find coverage that will fit your needs and your budget. Look for a plan that will give you the best possible use of your money and if your current company does not work out look for a better company. There are numerous national and local insurance providers and they offer bundled services so comparing your options would be a wise decision.
You can also ensure products or appliances you buy around the house. Especially if you have kids or pets, you want to cover big ticket items such as your TV, and appliances at home. Sometimes retailers offer warranty and insurance plans that cover you for 3 to 5 years, so when things break or malfunction you will have peace of mind and save on the expense.
Retirement Plan for your future
Many employees and companies offer pension funds and 401(k) retirement plans. Some employers even match 401(k) contributions, which is like extra money and a built-in raise. Contact your employer and inquire about the benefits available to you.
If your employer does not offer anything, that does not mean you don’t need it. You will just have to find an alternative way to do it on your own. Investing for retirement does not necessarily have to be a plan or a financial plan offered by a company. A retirement plan could be a savings account or CD, bond with your long-term interest-bearing investments. Which are usually low risk. You also have a high risk, high rewards category which is stocks and mutual funds. You could even buy gold bars or other Jewels in the anticipation that they will be worth more in the future.
I recommend talking to companies that offer retirement plans services and ask them exactly how much interest you can make on your money and doing some research and seeing if you could do better on your own.
I have many friends that are buying and selling products/assets and reinvest their profits to do more bigger deals. These individuals resell cars, furniture, and even sneakers which surprisingly turn a high return on investment, and many more items. I have a friend who buys items listed online that are not well presented, cleans them up and takes better pictures and relist them online for a profit. My personal favorite is real estate, everyone needs a place to live and with the prices of homes steadily increasing, there’s a lot of money in buying and selling housing.
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