Financial Planning

When thinking about retirement, most of today’s generation does not think about how much they will need to live a comfortable life. They only think about the surf and sand and peace and quiet. If you are one of these people, you are not alone. Most people today do not set aside enough for their retirement.

When it comes to retirement, most people do not discuss the issue of saving for their retirement years. You cannot live out your big dreams of sailing around the world or driving around in an RV if you cannot support those dreams. The financial responsibility, if not adequately planned for, can turn into a grave burden during retirement.

There are simple steps to follow when you are saving for retirement.

Needs versus wants: Determine your needs from your wants. Your microwave may break down and you feel that you need a new one. Do you really need it or do you just want it? Yes, they are convenient but convenience does not equal need. Spend wisely and use the extra to save.

Remind yourself why you are saving: Post a picture of something you dream of around the house to act as an incentive. The picture represents your dreams.

Pay yourself first: Many companies offer 401k’s and will match a part of what you put into them based on a percentage. Therefore in order to get the most from your 401k, you should contribute the maximum allowed.

Keep making payments: If you have a loan and pay it off, don’t stop using the amount of the payment. You were already living without that extra income so take the payment amount and put it into your savings account.

Put away the extra: Let’s say you receive some money from a family member’s will or you get a raise at work. Just like above, you already live without that money so unless you really need it, put the extra money into savings.

Lower your withholding: Put your W-4 to work for you. Keep a little extra out each pay period. It is better to have the money now to put away rather than wait for tax refunds to come around.

Make your money do the work: Make sure that your savings account has enough to support you for at least 3 months at all times.

Lower monthly fees: Get rid of all the services you pay for but do not use. Do you have cable but are never home to watch it? Even a $20 a month cable bill adds up to $240 a year.

Do the little things: If you find a coupon you can use, clip it. Pack a lunch everyday instead of eating out. Put the extra money into your savings and see how much, over time, your savings has grown from just the little deposits.

The most important thing to remember is that there is never a bad time to start saving for your retirement. Even if you only have a few extra dollars, putting it into a savings account will help it grow. No amount is too small to be saved.

1. Start with the Right Attitude

Financial difficulties can be very distressing, but with the right attitude you can start to turn your life around. Firstly you need to face the fact of your predicament without judging or criticizing yourself. Just realize that you have slipped financially and need to take action to turn things around.

2. Set up a budget

You can’t manage what you can’t measure. Therefore the first order of business is to set up a monthly budget, where every incoming and outgoing expense is recorded. Break quarterly or yearly payments down into monthly expenses. Once you know exactly how much money you have coming in every month and where it is going, it’s easier to implement effective cost cutting measures.

3. Increase Your Income

There are only two ways to improve your current financial situation and that is to cut expenditure or increase your income. Even a casual job can give you a little extra money to give some financial relief. If you have any outstanding bills to pay a fast way to get cash is to have a yard sale or sell off any unused jewelry.

4. Avoid Bankruptcy

Bankruptcy may seem like the magical solution to all your debt problems, but it will only put you into a deeper financial hole. Bankruptcy will stay on your credit record for ten years and will make it virtually impossible for you to get any type of loan you may need. I would only recommend bankruptcy as an absolute last resort.

5. Consolidate your Debts

Consolidating your debts can be an effective way of reducing your monthly expenses and putting you back on track to financial empowerment. There are three main ways to do this. It would depend on your own personal situation, which one would suit you best. The fastest growing trend is to have a debt consolidation company consolidate your debts for you. The other two ways are using the equity in your home or transferring all your credit card debt on to one card.

Debt consolidation is a popular way to put people back on the road to financial freedom. However, the overall way you manage your money needs to change to ensure a brighter, more abundant future.

The Average American holds seven credit cards in their wallet at any given time, and one out of every seven Americans has 10 credit cards! The credit card debt in America has been steadily rising over the last decade.

Some studies have shown over 70 percent of consumers use cards for most purchases! This produces results like VISA being held accountable for over 830 billion dollars of charges for the year of 2008. Americans are looking for ways to lower their credit debt or eliminate their credit card debt, without adding any additional debt (loans).

The most radical way to reduce credit debt is by cutting up your cards! Cut up cards, do not sign up for new ones, and pay with cash. When you pay with cash, the money must physically be in your hands to make a purchase; therefore you’re less likely to impulse buy, or to purchase unnecessary items. If getting rid of your credit card isn’t an option, or you would like to keep one for emergencies only, try a debit card instead.

Debit cards are useful because they withdraw electronically from your bank account. It’s a good way to keep from spending money you don’t have, but on the other hand you can’t physically see all the money you could be spending, so impulse buying is still likely.

The best way to lower your debt is to be aware of your surroundings and your financial situation. Try making a budget with a free online budget planner, or write your plan down. You can cut out monthly expenses and the average American could save 300 dollars a month just by planning a budget. Not only will you lower your debt by being aware of financial income and expenses and knowing what you can and cannot spend, you will also be able to use the extra money you saved toward paying off your credit debt!