With the beginning of every new financial year, we look back and sigh at our mistakes and promise not to repeat them in the new one. Like the beginning of the new year, there are many who make resolutions to make better financial decisions in the new financial year. To help individuals take better financial decisions in the new year, here are some financial tips for 2017.
Get Paid What You’re Worth and Spend Less Than You Earn
The tip itself is a simple one, but then there are many who struggle with the basic rule for a successful financial year. You need to make sure that you know the worth of your job in the market. How do you do that? You conduct skill evaluations, productivity, job tasks and evaluate your contribution to the company. Being underpaid can make a great difference during your working life, since your cumulative earning remains low.
The second aspect of this advice includes that you don’t exceed your earning when it comes to spending. It is easier to spend less and a little cost-cutting effort can help you make larger savings. It always doesn’t have to be big sacrifices.
Make A Budget and Stick to It
Right after you get your earnings, make an elaborate budget of all your expenses and stick to it. Sticking to the budget is something that you cannot be forced to do.
You have to stick to it on your own. Know that the budget will help you sort out your finances, and also ensure that you don’t over-spend and can end up saving money.
Spend What Is Left After Saving
Remember the Warren Buffet principle of saving and investing. If you decide to save after spending from your total earning for the month, chances are that you will be left with peanuts. Instead, decide on an amount that you will set aside for saving every month and stick to it. This will control your spending and make sure that you grow your savings.
Expert advice: You should save at least 26% of your annual earning. If you aren’t saving this much, it is time to cut down your expenses and increase your savings. This change will help you live a comfortable retirement and provide you necessary backup in case of a job loss.
Stop Using Too Many Credit Cards
It feels good to be offered free credit cards and earning points after spending on them. However, it is time you know that nothing comes for free in life. When you spend through credit cards, you end up paying for a transaction fee. This fee is included in the cost of the product or service that you purchase with the card.
There’s no harm in paying through a credit card, but learn to restrict it for emergency purposes like booking a train or flight ticket when you have to make a sudden unforeseen expense. Apart from cutting down on the credit card expense, cut down on the number of credit cards to a maximum of two. This will prevent you from falling into a debt trap. When you have multiple cards, and end up spending from all of them, you will have to end up paying all the finance charges and they can add up to quite a large amount.
Pay Off Credit Card Debt
Credit card debt could be quite a headache when you have to pay the large bill. On more than one occasion, we tend to forget that it is real money that we deal with when using the plastic cards. Despite our resolve to pay off the balance and outstanding bill, we often falter and then end up paying late charges and interests on the same.
In fact, we end up paying more for things that we purchase with our credit cards. In the new financial year, make a resolution to pay off your debts faster so that you can save on the high interests.
Purchase Enough Insurance
When financial experts ask you to cut down on unnecessary expenses, it’s not like they are asking you to cut down on purchasing insurance cover. Both life and health insurance are extremely important. While life insurance ensures
While life insurance ensures safety of your family, health insurance safeguards your financial planning in case of an accident or illness. Insurance cover prevents you from paying in case of an emergency.
Don’t Wait for March
Many professionals think of investments and tax saving right when March is around the corner. These individuals usually end up purchasing a product that doesn’t serve them any purpose. Financial experts say that we shouldn’t mix insurance and investments and should keep them separate. The easiest way to make sure that you don’t regret the financial year at the year-end is to start investing in April.
When you start early, you have time to study the product and earn good returns throughout the financial year.
Contribute to A Retirement Plan
You are saving at present to ensure a comfortable retired life. If your goal is a comfortable retirement then you need to maximize your retirement savings. You can put your savings in the salary deferrals 401(k) plans, automatic monthly withdrawals from a checking account and from paying down a mortgage.
You can also invest in tax-advantaged retirement schemes like IRAs. If your employer has the 401(k) plan and matches dollar for dollar up to 3% of your salary, then make sure that you contribute at least 3% from your monthly salary so that you end up saving 6% of your salary despite using only 3% for the same.
Invest for The Long Term
When you think of investment, think of it like a marathon and not a sprint. You should develop an investment strategy and stick to it no matter what is the situation of the market. You should know that the earning on
You should know that the earning on diversified portfolio of large capitalization stocks is 10% compounded annually since 1926, on the other hand, corporate and government bonds have earned only 6%.
Invest in Your Kid’s Future
Right at the beginning of the new financial year, think of little things that you can do in 2017 that might have a huge impact for your children in the next ten-fifteen years.
You can fund a 529 account for college or invest in the 529 ABLE account for children with disabilities. Start a trust fund or fund a small investment account that will become a safety net for their college education. Remember that the small acts today will go a long way in helping your kids in the long run.
These are some of the most basic financial advice for 2017. Remember there is power to planning, so get a plan set up and follow it. Plan for the future and stick to it. Automate your investment strategies and savings whenever there is scope for the same.
Review your steps beforehand and seek financial help whenever you deem necessary. There’s nothing more foolish than risking things simply because you didn’t know what to do. Seek the help of a financial planning professional and get ready for the new financial year.
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