When it comes to personal finance, everyone has their own approach. If you want to be in good financial shape by the time you reach retirement, and throughout your working life, there are some fundamental principles that you can’t avoid. Here are three areas that deserve your attention when it comes to getting your financial ducks in a row.
Get a Clear Picture of Where You Want to Be
One of the biggest mistakes people make is never stopping to think about what they want to achieve financially. Where do you see yourself in 5 years? How about 20 years? Try to visualize what you want your life to look like in retirement and then you can begin to set some financial goals so that you can get there.
Without a clear picture in your mind of what you want to achieve financially, the odds of being successful financially are slim. What amount of money would it take to live the way you choose to live instead of being subject to the whims of everyday life? Most people never stop to think about this and if they do, they write it off as a fantasy. In reality, the amount of money you need to change your life isn’t as astronomical as you might think.
Get into detail about what you want. What kind of house do you want to live in? What kind of car would you like to drive? How often would you like to travel? Start doing some research and figuring out how much money it will take to reach those goals. Write down the goals that you want to achieve, and then you can begin to put together a plan to get there.
Don’t be Afraid to Take Risks
One of the biggest mistakes that people take when it comes to finances is that they don’t take big enough risks. They try to play it safe, hoping that they make it safely all the way to death. What are you waiting for? Instead of always playing it safe, get out there and take a few risks. Most people over-exaggerate the risks of a situation and don’t place enough value on the potential rewards.
When it comes to taking risks, that doesn’t mean to throw all of your money at penny stocks or play the lottery. Have you been thinking about investing in or starting a business? What’s stopping you? Do you have any other ideas that seem like they could work, but you’ve been putting them off for some reason? Now is the time to evaluate those possibilities and think about taking a risk. It might be the gamble that pays off and makes all the difference in your life. If you never take a chance, you can’t win.
Review Your Insurance Plans
One of the biggest financial factors that people overlook is their insurance plans. They go out and get life insurance, look for cheap auto insurance for the power train, and get homeowner’s
insurance one time and then they never think about it again.
Take time to review your coverage limits, how much you’re paying in premiums, and what your deductibles are. Insurance plans are changing and improving over time, so it’s a good idea to reevaluate your plans periodically. You never know how much money you are throwing away until you take the time to do a little bit of research. If you’re able to achieve some savings by switching to a different insurance provider, you could invest that difference, put more money into savings, or have more money in your budget every month.
Overall, it’s critically important to think about and take action on your financial situation. No one else is going to come in and take care of these things for you. It’s your responsibility to figure out how you can improve your financial standing and do the things that you want to be able to do.
By: Walter Bodell