Money is the most essential thing for survival and what if we are not able to maintain that money in the long run?
The fact is that most of the people have no idea regarding money management or the person who is doing the job don’t have any plan for their management of money after retirement.
Most of the research concluded that most people will not able to demonstrate financial reading near retirement days but this is a serious concern and require proper planning so that you can achieve financial stability after your retirement.
One survey is conducted to analyze the financial dependency of people in America in 2019 that shows that more than 71% of the people feel financially secure and that is double the number of people in 2009.
So to resolve this problem we have met many financial experts and they provide some valuable tips to attain financial stability. In this article, we will provide 8 tips to achieve the financial security that will help you in money management.
Tips to achieve Financial Security
It is advised to read all these steps carefully so that you can apply it in your day to day personal life.
Tip 1: Make a practical budget
Manager of Financial planning, Brain Walsh said that every person should make his practice budget that is necessary for your survival. Brain said that it is the best way to estimate and eliminate your expenses. By creating a budget, you will feel confident and relaxed at the same time.
If you have maintained your monthly budget then it will help to eliminate your undesired expanse and it leads your saving future. Brain suggests that you should follow 50-30-20 rule in your life that stand for 50% of your income should be spent on an essential utility like food, clothes and shelter, 30% on non-mandatory expenses that include your health uncertainties and 20% of your income must be preserved for your saving.
Tip 2: Maintaining your emergency fund
Life is full of uncertainties so you must be prepared for it. Sofi Walsh, One of the managers in the advisory department suggest that you should make a separate saving account in which you should deposit that funds that can be utilized in case of emergency. This account will make you confident and eliminate from future uncertainties.
Having hard cash in such a situation is the most powerful weapon. It will not only help to reduce your financial stress but also provide you emotional support as well. Maintaining a budget for your future uncertainties is very essential, you must save 4-5 months of your yearly income saved for an emergency.
Some great intellectual people suggest that the 10% of your income must be saved In that type of account and if you are not able to put 10% of your income then start a small amount of money like 10$ or 20$ per month but make sure there must be a consistency in this pattern.
Some people adopted this pattern and started saving 20% of there income in a saving account but after some time they withdraw that amount for personal expenses and in case of emergency they haven’t sufficient amount of money to get rid of that problem. So it is advised to avoid such situations.
Tip 3: Consider all expenses and debt
The next step in this process is that you have to consider and write down all the expenses and debt. The list will help to identify your all expenses and after knowing that you can work on them.
Another benefit of making a list of your expenses is that you can track your per month expenses and figure out some errors in that. Some experts believe that this method helped many people to get rid of high loan and helped in maintaining savings.
Tip 3: Optimize your current expenses
The next step after considering your expanse is that you need to optimize them all. Let me clarify, Likewise, you have written down all such expenses like a dental check-up, laundry expenses and at the same time, you have written the amount of EMI that will deduct from your account on a monthly basis.
It will help you to identify the priorities of all such expenses. The amount of home loan is compulsory and the gardening charges are not compulsory. So you can cut down your expenses by putting some extra efforts.
Tip 4: Find ways to increase income
This is the most suggested tip from millions of people someone great said: “Focus on increasing the possibilities of earning rather than cutting down expanses”. A great study suggests that most of the multi-billion people have more than one source of earning. So the learning is that you should focus on some extra income possibilities. There is not a single profession that is suggested for extra earning, you have to look for that extra hook.
There can be anything that matches with your profession. There are millions of opportunities that can be run with your current job or business. For example, if you are the owner of a coaching institute then you can also provide career counseling of students by charging little extra money. In that way, you can increase your earning.
Tip 5: Save for your retirement
Saving is the only thing that will remain with you when no one else is with you. So it is advised that you must make a plan after your retirement. If you are in a job then there must be an account in which you have to put a fixed amount of money that you have to use after your retirement. The account is different from your emergency account.
Some financial planner said that you must save 5% of your salary in your retirement fund account right from the day of your joining. It will help to make you financially stable or help to start your own business after retirement.
Tip 7: Goal setting
Goal setting is the most important aspect of this process. The point is different from the above points but was necessary to mention because goal setting will help to make the basic structure of your financial planning. You should make a proper goal in order to achieve them. The goal includes short term goal and loan, Short term goal duration is 1 year and the duration of long term goal is between 5 to 7 year depending upon your decision.
Making your goal statements will help to track your overall performance and helps to achieve your desired result. The list of goal includes an overall requirement that you want to achieve that can be any job position of any material. The goal will help to boost your energy and encourage you to put extra efforts.
Tip 8: Consultancy with a financial planner
If you have gone through the above steps then it is not mandatory to approach a financial adviser but if there is very much instability between your income and expenses and you are not able to overcome the situation then it is better to approach a financial adviser because in such emergency it becomes difficult to analyze situation and making decision so a financial adviser will help in recovering.