By Cathy White, EA
They say every journey begins with a single step. Your journey to financial well-being is no different. These could also aptly be called steps, because you can more easily take control of your finances one step at a time. Remember, the sooner you start, the sooner you’ll reach your intended destination.
- Build an Emergency Fund- Whatever your current income is, you need to establish an emergency savings account. Having a financial buffer means you don’t have to hit the panic button or pull out the credit card when life events happen. And you’ll be surprised the peace of mind you’ll get by having a little cushion.
- Make a Plan to Pay Off Debt- Establishing a strong financial foundation is built on eliminating bad debt. Once you have your emergency fund, you can begin to pay off your highest interest debt. Then, systematically pay-off each of your debts. Start by concentrating on the most expensive debt, and then, systematically pay them off in descending cost order
- Start Maxing Out Contributions to Your 401(k)- Even if you can’t contribute the max, begin contributing something. If your employer “matches” contributions, then contribute at least enough to get the match (this is free money). If your employer does not offer a retirement plan, open an IRA account and make monthly contributions. You can contribute up to $5500 in 2016.
- Start Saving/Investing- People who save/invest end up with savings & investments – pretty simple idea. Worry less about picking the “perfect” investment and more about putting more away. There are lots of great resources that will help you find safe investments – consult with professionals.
- (If you have children) Start Saving For College- You should begin saving for college expenses as soon as you have a child. The time element of a long term savings plan works best with MORE time. The sooner you start saving and investing the better off you’ll be.
Though it may not always feel like it, you have control over your financial life. Taking action can certainly help you feel more in control, and set you on the path to financial health and security. Do you know what people with no debt and cash in the bank can do? Anything they want!