Want to reach your money goals? Here's a four-step process to achieve your dreams!
(BPT) - The new year is just around the corner and it’s never too early to think about your 2020 goals — and for many, this means prioritizing finances. Taking the time to focus on your goals and determine what’s important to you financially is the best way to set yourself up for success, but actually following through can be difficult. These easy financial exercises from Vanderbilt Mortgage will help you reach your goals in the new decade.
1. Outline your plan
If you don’t already have one, establish your plan. Write down short-term financial goals, such as creating a monthly budget, and long-term goals, such as paying off a debt or buying a home. Defining these goals will help as you set your budget for the next year.
2. Create a monthly budget
Gather pay statements, bills and bank statements to get started. You can write down all this information or use a budget tool. Start by calculating your monthly income, which includes not only the amount you may get from a regular paycheck, but also any money you get in government aid, child support or pensions. The next step is to look at your bills and bank statements to find out exactly what you spend in various categories of expenses such as utilities, auto, medical, personal, insurance, etc. This accurate information will empower you to take control of your spending.
3. Set a savings goal
Saving is another important aspect of financial health. Whether you’re using a general savings account, adding to an emergency fund, or setting aside funds for a new home, saving for larger financial goals helps you prepare and gives you peace of mind no matter where life takes you. If you’re new to saving, start small. Simply skipping your daily latte from the coffee shop a few times a week can add up quickly.
4. Stick to it
The statistics on how many people actually follow through and keep their New Year’s resolutions are rather bleak, but sticking with your financial goals will pay off. Stay on track by monitoring your progress each week. As you get closer to your goals, excitement will build and you’ll be motivated to keep budgeting and saving.
Vanderbilt Mortgage offers helpful online resources whether you are looking to purchase a new home or keep your current home in great shape. “Here at Vanderbilt, we want to use our years of experience to help current and future homeowners.” Said Eric Hamilton, President of Vanderbilt Mortgage, “Providing educational materials for every step of homeownership is one of the ways Vanderbilt is with customers every step of the way.”
Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), MT Lic. #1561, Licensed by PA Dept. of Banking. Sponsored ad content from Vanderbilt Mortgage and Finance, Inc.
Most people don’t have enough money saved for a rainy day. It’s important to have enough money in the bank to be able to survive a major financial downturn like a job loss. You should also be saving for your retirement. Maybe you are worried about the state of your finances and wonder how you can get in control of them. The key to getting control of your money is to live on less than you have. Here’s how.
Putting Away Something in Savings
Building an emergency fund counts as the most important financial step you can take to ensure that you are living below your means. Most financial advisors suggest that you have between three and six months' of income stored in savings in case of an emergency. Most people don’t. The problem is that if they become unemployed, they’re forced to live on credit cards or loans from family because they have no money in savings. If you have to borrow money to live, you’ll eventually have to pay it back or go bankrupt. Putting money into savings each month ensures that you never have to go into debt should a major financial blow occur.
Not Investing Too Much
It's certainly true that real estate, starting with your home, can be a sound investment. That said, you should be careful about putting too much money into real estate because doing so can make you property rich but cash poor. While it’s nice to have property, you may not have enough money in the bank should you experience a job loss or serious illness. So how much can you safely invest in your home? Here’s a rule of thumb. The average American making $61,372, assuming they have no debts, should pay no more than $2,301.45 a month if they buy a house with a conventional 30-year mortgage. This means that you would have no more than 30% to 40% of your money sunk into real estate at any given time. Following this tip will keep you from paying too much on housing.
Living Below Your Means
Living below your means ensures that you always have more money coming in than going out. People who adopt this lifestyle often vow to forego buying something new until they can pay cash for it. If they do get a raise at work, they pretend to themselves that they are still bringing in the same amount of money each month, and the extra money from their raise goes into savings or an IRA. The less of your money you spend, the more of it you can keep.
Spending less cash than you earn takes effort. It’s really a lifestyle choice and not a one-time thing. To get started, you first want to put money into savings each month. Next, be mindful of how you invest your money. Being cash poor can hurt you if tragedy strikes. Finally, do your utmost to spend less money than you have. If you follow all of these steps, it’s unlikely that you’ll ever have to worry about your finances.
(BPT) - If you had to grade your financial literacy, what would it be? Are you an A+ saver, investor and planner, or do you think you could do better? If you grade yourself average at best, you’re not alone.
When asked to grade their own financial literacy, more than half of Americans say they’d earn a “C” or lower, according to new data from Prudential Financial. This isn’t surprising, considering data from Prudential’s Financial Wellness Census shows less than half of Americans are on track to meet their financial goals, including planning for retirement.
“Regardless of where you are on your family’s financial wellness journey, the best way forward is through financial literacy,” says Prudential Advisors President Brad Hearn. “Researching, educating yourself and getting advice from a financial professional can help you make the best decisions based on your life stage, risk tolerance and goals.”
Hearn says each family’s situation and goals are unique, and things like life stage and personal preference will impact how they choose to prepare for their financial future. To get started, here are five financial wellness basics every family should master:
Set up an emergency fund
Life is a series of experiences, and sometimes the unexpected can hit your finances hard. Whether it’s a car breaking down, your AC unit on the fritz or even losing a job, it’s important to be prepared for emergencies. If you don’t already have an emergency fund, start saving a little each month until you reach your goal. A good rule of thumb is to have three months’ worth of expenses saved in an emergency fund. So, if your monthly expenses are $2,500, you should have $7,500 saved.
Create a budget
Saving for college? A new car? How about starting that emergency fund? Whatever your family’s financial goals are, it’s important to have a plan in place that helps you achieve those goals. Budget to manage day-to-day expenses, and include in that budget a commitment to save for bigger milestones. For tips on getting started, do some research. There’s no shortage of advice, whether you decide to go it alone or consider using the help of a professional financial advisor.
Plan for the unimaginable
If you have people who count on you for financial support or caregiving, you should have life insurance. A life insurance policy can help give your family financial peace of mind should the worst happen. There is no rule as to how much life insurance you need, but important things to consider are your annual income, mortgage debt, potential college costs for kids and other future financial obligations.
Save for retirement
According to Prudential data, of Americans who have retirement savings and debt, nearly one-quarter have more in total debt than in retirement savings (23%), while 15% of Americans say that they have no debt, but also have nothing saved for retirement. Planning for retirement is something that should start as soon as possible. If your work offers any type of matching program, make sure to take advantage. If you don’t, you’re essentially leaving free money on the table.
Seek professional advice
Retirement, life insurance and savings can be confusing. Information overload is partly to blame. According to Prudential data, two-thirds of Americans agree that the list of things they need to learn to successfully manage their finances keeps growing, not shrinking. That’s where financial literacy programs and professional financial advice can play a key role. Nearly two-thirds of Americans don’t have a financial advisor. They say they cannot afford one (42%) or don’t believe their financial situation warrants needing an advisor’s help (26%). The reality is that advice is more within reach than ever before — and it’s not just for the wealthy. A financial professional can help at various stages in life and work with you to create a strategy based on your timeline, risk tolerance and goals.
“Financial wellness isn’t always a matter of having more money,” says Hearn. “Instead, it’s a journey that takes a combination of proactive effort, dedication and professional guidance.”
Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries. Life insurance is issued by The Prudential Insurance Company of America, Newark, NJ and its affiliates.
Your washing machine suddenly breaks down, a child requires a laptop for school or your car needs new tires. Sometimes surprise bills can be difficult to cover. Understanding your options for financing larger purchases can help ensure you make the best choice to meet your short-term needs without compromising your long-term finances.
How to Navigate a Financial Emergency
(Family Features) Your washing machine suddenly breaks down, a child requires a laptop for school or your car needs new tires. Sometimes surprise bills can be difficult to cover.
Life’s financial emergencies happen to everyone, but 6 in 10 Americans cannot cover an unexpected $500 bill without selling something or borrowing money, according to Bankrate.
As many as 70 percent of U.S. families live paycheck to paycheck, according to Alok Deshpande, founder of SmartPath Financial Education. In fact, less than 30 percent of families today have anything left at the end of the month to put in savings. That reality is echoed by a recent GoBankingRates survey, which revealed that 69 percent of Americans have less than $1,000 in savings and 34 percent don’t have any savings at all.
“When you don’t have cash for something you need, there are many different financing options available. However, few realize that many of these options can lead to a debt spiral that can be difficult to pull out of,” said Richard Carrano, CEO of Purchasing Power, an employee purchase program offering consumer products and services through payroll deduction at the workplace.
“Regrettably, circumstances and bank accounts don’t always align. That’s why it’s so important to be ‘credit educated’ – to understand hidden costs and fees associated with high-risk credit options and avoid making financial mistakes that can hound you months, even years later.”
Buying items on sub-prime credit or through high-interest vehicles like payday or title loans can be risky propositions, particularly if you have a low credit score to begin with. Understanding your options can help ensure you make the best choice to meet your short-term needs without compromising your long-term finances. Consider the following:
Cash: Paying cash for a major purchase makes the most sense in terms of avoiding exorbitant fees and preventing credit dings from missed payments. However, cash may not always be readily available.
Credit cards: Chances are, even with a shaky financial history, you can find a creditor willing to offer you a line of credit, but you’ll likely have a steep annual percentage rate that accrues each month. Furthermore, if you’re unable to repay more than the monthly minimum, you could end up carrying that debt for years before it’s fully paid down.
Employee purchase programs: Research shows that financial stress at home regularly impacts employee productivity at work. This leads many employers to offer an employee purchase program such as Purchasing Power, which allows you to buy what you need through automatic paycheck deductions over a 12-month period. There’s no credit check, zero interest and no hidden fees. There’s also a free financial wellness platform to help with budgeting, credit reports and personal coaching. Learn more at PurchasingPower.com.
Rent to own: With rent-to-own products, you pay a monthly principal amount plus service fees and taxes for a period of time, up to completing the rental agreement and owning the item outright. While the monthly rate makes items like appliances and furniture immediately accessible, be wary of the long-term cost. Renters can end up paying as much as three times the retail value of an item before satisfying the terms for ownership.
Payday/Title loans: Essentially, these loans function as a loan against a future paycheck or your vehicle. They often come with high percentage rates and fees, as well as extremely short repayment schedules. Rely on these loans only if you are certain you can cover the entire loan and associated fees by the designated due date.
Whatever option you choose for emergency financing, understanding the repercussions can help you long-term.
Main image (couple budgeting) courtesy of Getty ImagesSOURCE:
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