As you get older, you need to consider how you aim to manage your personal finances; whether you are paying off a mortgage or saving your money for retirement, it is always a good idea to get advice as to how you can make your money work for you in the long term. It is always best to be wise with your money as early as possible, therefore following these top tips should ensure both yourself and family members are taken care of through the management of your finances:
1. Build up cash reserves
According to experts, one of the most effective ways of guaranteeing financial security is to build up cash reserves of between 3-6 months so you can always prepare for any unexpected outgoings. One of the best ways to manage this would be to reduce unnecessary expenditures and ensure a select amount of money is put away each month from your weekly or monthly income. Check out this guide on how to build up your cash reserves effectively.
2. Set out your goals
Paying off the bills while still trying to fulfill your goals can be tricky. Therefore, it is essential you stick to a clear budget which allows you to remain out of debt, while still being able to do the things you enjoy. You may wish to work hard and play hard until the age of retirement and worry about future finances at a later date; or you may have the dream of retiring early and working extra hard to live a comfortable life at the end of your career – both of which should be well thought out so you can spend your money wisely without worry.
3. Pay off debts
Before you can set up any set budgets, it would be advised to clear off any outstanding debts. For example, credit card debts, medical bills or student loans which are having heavy impacts on saving and expenditure. It would also be an idea to search for the best interest rates as a way of cutting down your final overall cost.
4. Understand the value of family heirlooms
Many people don’t realize that they are sitting on goldmines within their home, due to being handed down antiques from relatives which can often seen as simply junk and mistakenly discarded. It would always be worth taking these items to an expert who will be able to give you a rough figure as to how much they are worth. Such items could provide you with extra savings aside from your income.
5. Set up an IRA account
You may even decide to set up an individual IRA account, solely for a retirement fund in which you are able to dedicate set up payments into the fund, as well as the benefit of having your tax returns cut to a lower rate.
6. Manage your assets properly
If you are near retirement age, you may have considered writing up a will so your assets are legally handed over to selected loved ones via the legal document. It is often a huge misconception that most people only need ‘a simple will,’ however, it is often the case that a trust will need to be set up to avoid probate during the selling of an estate. To get a trust, you will need to have already written a will. Setting up a trust fund is the perfect way of providing financial stability for future generations. Here is a useful guide on how setting up a trust fund could be beneficial for your family. If you need any further information on cutting out the cost of probate, it would certainly be worth hiring a probate attorney.
7. Investing your cash
Once you have a retirement plan set up, you may opt to put your money into an investment fund. You will only need to add a few dollars to begin with, but the results can be very substantial once you continue to add more and more money to the fund. If you wish to invest in individual companies, then you can always choose a Direct Purchase Plan; in which you work directly with the company rather than through a middleman.
Other options include putting small investments into brokers or use ETFs. Whichever option you choose, there is a high chance you will get a good return, but doesn’t necessarily mean you need access to a large sum of money to be eligible for an investment.
8. Save for tuition fees
If you have children or grandchildren and are hoping to pay for their tuition fees, it would always be advised to start saving when they are small in order to build up a decent lump sum. Even if you only have a very small amount to add to the account upon open, every little certainly helps and will prevent them having to take out their own loans.
9. Life insurance
Although you may only be in your 40’s or 50’s, having life insurance would be an extremely smart move to make in terms of long-term financial planning. Due to many people having fairly young children around this age; should one spouse happen to pass away, the costs of keeping the children would be extremely severe for the single spouse alone to take responsibility. Many people believe they are already fully covered with the insurances they already hold; however, this is often not the case. Check all your insurances; for example – house, health and car to check which policies you are covered for.
10. Planning for future care
Although it is a fairly morbid concept to think of, there may come a time in which you need to consider saving up for future care, should you happen to become ill or in need of extra assistance in old age. If you were ever to lose the ability to think for yourself, how would you end up paying for your care? In order to manage care financial planning, you could set up a separate account should such an instance to occur, as well as recording any preferences you may have.