The future is always a scary thing, especially if you are financially unprepared. It can hold so many possibilities, but it can also hold many unexpected and unwanted expenses.
There will always be bills and even debts to pay, and emergencies can always come up that will take a toll on your finances. What can you do to prepare yourself for the future even with limited finances?
To answer this question, here are six tips that, if followed diligently, can ensure a financially stable future for you:
Define what you want your future to be
A stable, financially secure future starts with a vision, so you must have a clear and specific view of it. Do you envision yourself having an early, active and long retirement? Or do you see yourself continually producing income, perhaps pursuing a lifelong dream?
A vision of the future will help you see exactly what you need and what you need to be doing now to see this vision through.
Focus on what you can control now
There’s no use worrying about what problems or expenses the future may bring, and there’s no definite way you can control how the market or economy will behave. So instead of worrying about those things, try to focus on what you can control, which is your savings. Which brings us to the next point –
Saving is and has always been critical to preparing for the future. In order to do this, there are the usual steps of creating budgets, living below your means, and prioritising your needs over your wants. But while all these steps are well and good, these are often hard to do and can prevent you from enjoying the fruits of your labour now. So how can you save and also enjoy your earnings while you’re young?
One good way of doing it is by automating your saving. Set up an automatic monthly contribution to a retirement plan like a 401(k) plan or Roth IRA. This way, you won’t have to worry so much about scrimping all the time, and you can set it up in such a way that your contribution increases as your income increases, making it easier and faster to save more.
Set short-term goals
As we’ve stated before, worrying about future problems is an exercise in futility, and so are making long-term goals which try to remedy these far-off problems.
Instead of wasting your energy on difficult, long-term goals, focus on making and achieving short-term goals. These short-term goals can include paying off your current bills and debts by the end of the year, making automatic monthly contributions to your retirement plan, buying a house or buying a new car. Just make sure that these goals are precise, measurable and attainable.
By setting and achieving these short-term goals, eventually you will be able to achieve your long-term ones without even realising it.
Make good investments
There are countless things you can do with your money, but only a few can be considered good investments. These include business investments and property investments, and since these come with risks it’s best to start small and start early while you still have the time and resources to recover in case they prove unprofitable.
While businesses and properties can be very valuable assets, you must realise that the biggest asset you have is yourself, so investing in yourself is also a very good, if not the best investment that you can make. You can do this by getting good insurance plans to protect you and your family, and investing in opportunities for betterment like career training, further studies and greater career opportunities.
Borrow money only for investments, not for your lifestyle
Contrary to common belief, borrowing money can be a good thing, but only if you use the money to invest. If you take a personal loan and spend it on lavish, unnecessary things you will only be increasing the cost of your lifestyle because you won’t just be paying for whatever you bought, you’ll also be paying the additional interest.
The wiser move would be to spend personal loans or credit on investments so whatever you gain from the investment will far outweigh the costs of borrowing. These investments do not necessarily have to be in material form – as we’ve stated before, they can be in the form of education, training and other programs that will help you reach your financial goals faster.
There’s no reason to be scared when thinking of the future. With every small but wise decision you make now, you can be assured of a financially stable life in the future.