Many Americans struggle to plan for their financial future effectively. In fact, recent studies estimate that over a quarter of the United States population has no emergency savings at all. While financial planning can seem like something that only wealthy people do, there are plenty of ways the average person can invest to put themselves in a better financial position. If you have dreams of becoming a homeowner, or even just of retiring one day, you’ll need to start taking your finances seriously well in advance. If you’re unsure where to get started, read on for five easy ways anyone can start to invest in their future.
1. Make a budget.
The first place to start for anyone new to financial planning is to create a household budget. You need to understand where your money is going in order to understand how to start saving it. Be honest about your spending when you sit down to design your budget; it doesn’t help if you set unrealistic goals and are unable to keep up with your plan. Learn to differentiate between wants and needs, and look for expenses that you can cut in areas where your spending is bloated. Often for people without savings, it’s too easy to lose track of money. Make sure you know where every cent of yours goes.
2. Set up automatic deposits.
If you’re not naturally inclined to save money, there’s plenty of technology to help you out. Set aside a portion of your paycheck to be deposited automatically into a savings account, so you don’t even have to think about it. If you wait until the end of the month to figure out how much money you have left to save, oftentimes you’ll find there isn’t any leftover. Setting aside a percentage of your check when it arrives ensures that the money will make it to your savings account before you have a chance to spend it, and it guarantees that the deposit will be made every month, not just when you remember.
3. Open up an IRA.
IRAs are among the most common, and simplest, ways to start saving for the future. Talk to an advisor to learn about both traditional and Roth IRAs, so you can understand whether up-front tax savings or tax-free withdrawals in retirement make more sense within your financial plan. The government also offers a Saver’s Credit on annual taxes, designed to encourage lower and middle-income Americans to open an IRA and improve their financial health.
4. Invest in life insurance.
No one wants to think about their eventual passing, but life insurance is an essential form of future planning, especially if you have significant assets. Life insurance helps you take care of your loved ones after you’ve passed on and ensures that your debts are settled without your family having to cover the cost. What type of life insurance and the amount of coverage is best varies depending on your situation, so it’s best to reach out to insurers directly with questions.
If you’re interested in researching what life insurance coverage would cost, it’s easier than ever to find life insurance policy quotes online. Having life insurance guarantees that your spouse, children, or whoever the beneficiary of your policy is will have the means to deal with the financial effects of your passing. The peace of mind that a complete life insurance policy can give both you and your loved ones is often well worth the cost.
5. Treat yourself.
While it’s important to take your future investments seriously, it’s essential to treat yourself. Whether it’s a trip, some handmade jewelry, or a night out at a fancy restaurant, it’s easier to keep focused on your goals if you take time to reward your progress too. It’s easy to say that a pendant or a pair of earrings isn’t a smart investment, but one of the most important investments in life is in your own happiness. In addition to just being enjoyable for jewelry lovers, precious metals like sterling silver and premium stones like diamonds and rubies hold value well, and they make beautiful collectibles to pass on to future generations.
Making decisions about your financial future can be overwhelming, and it’s easy to find plenty of conflicting advice on what to do. First, you should never be afraid to ask an expert for help. It’s always better to take extra time before you make a choice than to end up stuck with a bad investment down the line. If you’re new to financial planning, it’s best to keep it simple and focus on things like IRAs, bond ownership, and future-focused policies like life insurance to get started. Once you’ve got a few basic investments in your portfolio, and you’ve made a long-term financial plan with an expert, you’ll be well on your way to saving for a better future.
