Taking control of your finances is imperative to make sound investment decisions, and hence secure your future.
Yet, many are not great at managing their finances. According to CNBC, over 20 percent of Americans spend all of their annual income.Those who are saving some money aren’t saving up any significant amount compared to their income.
As per Go Banking Rates, 40 percent of Americans have saved less than 10,000 USD for their retirement.
Generally, over 56 percent of millennials have zero or little money in their retirement account, while 39 percent of Gen X and Baby Boomers have nothing saved for their retirement period.
These are all alarming statistics. The investments you make today help in securing your future later on. And this cannot be done unless you take control of your finances.
Here is how you can do so effectively.
- Know where you stand and get your budget in order
To take control of your finances well enough, to make investment decisions, you must first take a step back and analyze your standing financially.
You must figure out your net worth. This can be found by knowing the value of your assets and debts. If you have spent your wealth well, you won’t have a negative value. If you somehow do, you must first improve your net worth before worrying about where to invest your money.
After analyzing your finances, you must also look at your monthly budget. In case you don’t have one, it is time to make one. This is because it is easy to overspend when you don’t assign a maximum threshold to your spending. Track all yourspending to identify any expenditures that you can cut down on.
- Research, invest and divest
The chances are you have already invested in different tools. But, you might not be aware of the technicalities of them. You might not even understand if the investment is proving to be profitable or not.
Take matters in your own hand when it comes to investment decisions. First, know which assets you have invested in. Understand how they work and whether the investment has fared well for you. If it has, continue with it. If not, then divest and find other suitable investment options.
Monitor your portfolio yourself. Now, this can seem confusing and cumbersome.
The good news is that there are various quality software and tools available that come in handy. For instance, Ziggma is an investment Portfolio Management software that can help you in monitoring your investments and therefore make educated decisions regarding them.
- Pay off your debt
Paying off your debt is by far the most essential part of taking control of your finances.
This is because debt is your biggest obstacle to making investments.
According to the Federal Reserve’s Consumer Credit report, the total consumer debt is approximately $3.999 trillion! Similarly, as per the Federal Reserve Bank of New York, the total household debt is roughly $13.67 trillion. In other words, over 80 percent of Americans are in debt.
It is essential that you get out of debt before you begin thinking about investing your money.
Well, because as long as you are in debt, the money you own is never truly yours. You must use it to make payments to creditors, and depending on the amount of debt you have accumulated, you might not have enough left to sustain yourself and invest on top of it.
A study discovered that many don’t know how much debt they have accumulated. To pay off the debt, the first step is to know the exact amount and then pay the minimums on each of your liability to ensure that you pay at least some of it off quickly.
But how will you pay for your debt?
You can get another job or negotiate a lower interest rate and use the saved money to pay off the balance. To better find ways of becoming debt-free, talk to a professional.
- Think about your future
Generally, the investment decisions people make never take into account their retirement plans. There are specific investment tools made specifically for the future. Regardless of how profitable your other investments are, take out some portion of your savings to invest in your future.
For instance, most employers offer a 401k plan. Here, every dollar contributed by the employee is matched by the employer. In other words, you get double the money you invest. So, put at least the minimum amount in the plan to reap benefits at the time of retirement.
Another plan worth researching and investing in is Roth IRA, which allows you to withdraw money without paying taxes after your retirement.
- Ask for advice when need be
Taking control of your own finances doesn’t necessarily mean that you are going on a one-man mission. You can and should ask for help. When in doubt, talk to a financial planner.
After all, only professionals can truly tell you about the risks involved and help you find products that are best aligned with your level of risk and return.
Apart from seeking help from financial planners, you can also improve your understanding of wealth, budgeting, and personal finances via courses offered by banks and credit unions. In case you have family members who are particularly good with money, you can get their perspective as well.
The key is to understand your personal finances and take control of the decision power. It doesn’t mean to isolate yourself from help and professionals. You can listen to their advice as long as you are well-informed on their perspective.
Taking control of your finances seems easy on paper. But, the urge to spend your wealth and purchasing items on credit is real.
To save enough for investments, make sure to keep these urges in check.
- Follow a budget and pay off your current debt.
- Assess your current investments and think about where you want to invest in the future.
Pay heed to the advice of those around you. With these tactics, you will be able to keep your finances in check also can make money as a casino affiliate!