3 Best Advices For Your Personal Finance

Wednesday, November 12, 2014, 1:00 AM | Leave Comment

In this article we’ll talk about three things which are entirely for the betterment of your personal finances: 1) Figure out where your money goes, 2) Become a better investor with your saving money, and 3) Create a financial plan – a road map so to speak. In personal finances, these points apply to both men and women.

3 Best Advices For Your Personal Finance

  1. Figure out where your money goes

    I don’t want to use the word budget because for many folks it’s a dirty word and they don’t want to hear about it.

    However, unless you know where your money is going every paycheck, you’ll not be able to invest for growing your money.

    The very first thing you can do is to make sure you have access to cash for an emergency.

    Research suggests more than 50% of Americans couldn’t come up with $2,000 in cash in the event of an emergency.

    Think of an emergency fund as a bill that gets paid every month. You can set up automatic payments from your paycheck or checking account into a separate account that’s earmarked as an emergency fund.

  2. Become a better investor with your saving money

    How you invest is as important as how much you save.

    If you haven’t already done so, sit down to review your investments to ensure that you have a mix of stocks, bonds, and short-term investments that take into account your financial situation, tolerance for volatility (or risk), and when you will need the money you are investing.

    Beware of investing too conservatively. One of the best ways to give your money a chance to grow over the long term is by investing in stocks and stock mutual funds.

    Get used to riding the ups and downs of the market.

    If you are investing for the long term and saving regularly, a downturn can even help boost your savings, because you may be buying shares of a stock or stock mutual fund at lower prices.

    Keeping an eye on your investments doesn’t need to be a full-time job. In fact, your investment decisions can suffer if you monitor your investments too often or too closely.

    Studies by behavioral finance experts found that investors who checked their portfolios monthly were more likely to move them in a more conservative direction than those who reviewed them annually.

  3. Create a financial plan – a road map so to speak

    If you work, contributing to a traditional 401(k) or 403(b)—or some other workplace retirement savings plan—may be the smartest move you can make.

    Not only does it reduce your taxable income for the current tax year, it also enables your potential earnings to grow on a tax-deferred basis.

    If your employer matches money you put into a 401(k) or 403(b), don’t pass it up. Think of it as “free” money.

    If your company doesn’t offer a retirement savings plan, or if you are self-employed or don’t work, there are still options.

    IRAs are available to most individuals with earned income. And if you don’t work but your spouse does, you are eligible for a spousal IRA.

This article is inspired by Fidelity Investment.

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