Hey guys! Today, I have a guest post from Dhreen Tulsiani over at The Money Casa. Dhreen is a finance blogger and is sharing 10 great tips on how to be more financially secure.
Are you confident about your financial future? Most people would answer ‘no’ to this question. There could be several reasons for that, but the good news is that you can take steps starting today to drastically change and improve your financial future.
But what does financial future even mean? It means a future in which you are financially well-off. It is a future in which you do not have to borrow money from family, relatives, friends or the government to meet basic needs.
If you take care of your finances now, your finances will take care of you later. What you have now is your health and physical ability to do anything you want to do. As you grow older, you may not have the ability to work longer hours for money. This is why you need to take care of your finances starting today.
Basically, if you take care of your finances now, you can almost guarantee that your financial future is all set. You might be well on your way to achieving financial freedom.
Now the question is how can you take care of your financial future, or how can you future proof your financial future? Here are 10 steps you should take to secure your financial future.
1. Create An Emergency Fund
Many people live paycheck to paycheck. They do not have an emergency fund in place to meet any unexpected expenses they may incur.
Emergency fund is absolutely essential. It is not optional. Unforeseen circumstances can arise without notice. If these circumstances demand a large amount of money, then you’d better have that amount ready to use.
If you do not already have an emergency fund set up, you can set one up starting today! Here’s how you can create an emergency fund of $10K in one year.
By setting up an emergency fund, you can secure your financial future. This is because you would have access to finances when you need them the most.
2. Create A Budget
A monthly budget is necessary for you to keep track of your income and expenses.
Many people don’t have a budget. This makes them buy more than what they can afford. They then scramble to pay their credit card bills later in the month. All of this could be easily avoided if they have a budget in place.
When you have a budget, you have access to exact numbers. You can exactly see how much you are paying for every recurring expense. You can also see how much money you have left over.
Once you have a budget, you can make smarter decisions about the extra money you end up with every month. You can save a little and spend a little, and how much you save and spend would depend on your lifestyle and your personal situation.
Emma and Cleo are two powerful apps that allow you create a budget and make smarter decisions about your money.
The key here is to make smarter financial decisions every month. This habit will allow you to secure your finances for the future.
3. Cut Down Your Expenses
Learn about all the ways you can lower your expenses. By cutting down your expenses, you can save money on potentially each transaction you make.
If you are out shopping for groceries, use Flipp to price match your groceries. Make sure to get your cashback by uploading receipts on Checkout 51 and by purchasing through Rakuten.
If you shop online, use Honey to automatically find and apply coupons on the checkout page. If you are looking for in-store coupons, CouponSurfer and Savings.com are two great websites. In Canada, save.ca is a fantastic place to find coupons.
You can even lower your monthly bills by negotiating with your service provider. You can negotiate with them yourself or have someone do it for you.
By saving on monthly bills and regular expenses, you would have some extra money each month.
4. Avoid Spending On Unnecessary Things
Cutting down on monthly expenses can sure help you save some money every month on a regular basis, but make sure that you do not spend all the money you are saving.
It is very easy to go overboard with spending money, especially when you see that extra money in your bank account. Avoid the temptation to pull out your credit card and pay for something that you know you would not use in the long-term.
There are many unnecessary things you may be spending your hard-earned money on. Here are 15 things you may be wasting your money on. In addition, if you are addicted to shopping online, here are 5 ways to curb your online shopping habit.
Here’s a tip: every time you feel like spending money on something unnecessary, quickly deposit and lock up that amount into your savings account.
By avoiding wasting your hard-earned money on unnecessary things, you could secure your finances for your future more quickly than you would otherwise.
5. Save For Retirement
Saving money for retirement is extremely important. If you are young, you are most likely not bothered about retirement. But how early you start saving in your career can make a difference of a million dollars at retirement.
The earlier you start saving, the more money you will have when you retire. This is because of compound interest.
If a person aged 25 starts saving $1000 per month for 10 years, at a 7% annual rate of return, then at the age of 65, this person would have $1,444,969. If a person aged 45 starts saving the same $1000 per month for 10 years, at 7% annual rate, then at the age of 65, this person would only have $373,407. (Source: MoneyUnder30)
The key is to start as early as possible. Automate your deposits so that you do not miss out on any month’s savings opportunity. If you are at a beginner level, make sure to check out Wealthsimple as they make it very easy to invest, save, and trade.
6. Advance Your Career
The days of staying with one company for 30 years are long gone. If you actually stay with one company for that long, you most likely will not reach your full career potential.
Find ways to advance your career through promotions, higher-paying jobs and networking opportunities.
Ask your current employer for a promotion or a raise. Look for better job opportunities in your field. Attend networking events and get to know as many people as you can. All of these strategies can really advance your career to the next level.
Advancing your career would also ensure an increase in your income. As long as you don’t end up in the next tax bracket, by advancing in your career, you would have the opportunity save more money for your future. If you do end up in the next tax bracket, then start a side hustle to increase your income even more.
7. Start A Side Hustle
Increase your earnings by taking up a side hustle.
There are many different kinds of side hustles you can start. What side hustle you eventually decide to take up depends on how much time you are willing to devote to it, what skills you have, and what you are passionate about.
I like to divide side hustles into two categories: casual side hustles and entrepreneurial side hustles. Here is a list of all the different kinds of side hustles you can start.
By taking up a side hustle, you can add an additional source of income. This additional money would allow you to secure your finances for the future.
8. Invest In Yourself
Investing in yourself could quite possibly pay off much more than what you might be earning now. You could have one of the best return on investments if you decide to invest in yourself.
There are various ways you can invest in yourself. You can take up online courses to learn completely new skills. You can also take up courses to enhance your existing skills and to give you an edge in your chosen career path.
By learning new skills and skills that are in demand, you can open up a world of new opportunities for yourself.
Your investment could very well be life-changing for you. This could be one of your best decisions you ever make.
9. Stay Away From Debt
You might be fancying a shiny new car or a bigger house, but hold on to your money. If you take up a car loan or a mortgage, you would be stuck with your debt payments every month.
Having an additional monthly expense can put you under a lot of burden, especially if you don’t have a constant guaranteed income. If you decide to take up a loan that requires you to pay $1000/month for 5 years, it would mean that you would have to shell out $12K off your annual income every year.
Instead of paying an additional amount every month for something that you don’t really need, deposit the excess money that you have into a high-interest savings account or invest in ETFs or mutual funds.
By staying away from debt and by instead contributing the excess funds to your savings account, you can really build up your savings over time.
10. Read Financial Books
The importance of reading financial books cannot be emphasized enough. If you have not read a financial book until now, I highly suggest you read one as soon as you can.
My favorite book is Rich Dad Poor Dad by Robert Kiyosaki. This is a book that changed my entire mindset about money. The concept of money has been very eloquently explained in this book. It teaches you how you can go about making money make money for you.
A yet another book I recommend reading is Think And Grow Rich by Napoleon Hill. Your perspective about how you can go about making money will change after reading this book.
If you really want to guarantee and secure a great financial future for yourself, read, absorb and apply the concepts presented in the aforementioned books.
Be sure to share these 10 tips towards financial security with your friends and family!
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