Financial security can feel like it’s beyond your reach when you’re not sure what it means. It’s different for everyone, but in most cases, financial security gives you the ability to live comfortably now and in the future. If you want to make sure you can get the best of both worlds, you should follow these three simple tips. These tricks will help you live well now while preparing for the future.
1.Go beyond a basic savings account
Ask most people if savings are important, and they’ll agree they make up the foundation of financial security. It’s only with robust savings that you can face a bill, medical emergency, or retirement with confidence. Without them, you wouldn’t even be able to take a vacation or make a large purchase.
However, it’s not a simple case of starting savings and leaving it.While better than nothing, a basic savings account isn’t ideal for long-term goals. They offer a low interest rate that can’t compete with inflation, and the gap between these rates will only continue to widen as the years pass. As inflation strengthens its lead on your basic interest rate, your savings’ purchasing power will diminish each year it sits in a basic account.
If you have grander plans than a vacation, you’ll want to research what kind of high-interest savings accounts, specialized retirement funds, and other investments are within your financial reach. Check in with a guide like this one to find out more about mutual funds, robo-advisors, and 401(k)s to get a better understanding of your options.
- Find personalized advice
The financial industry is never stagnant. With new products and services constantly emerging, it’s crucial you keep up to date on the latest opportunities and terminology. When you spend time educating yourself, you’ll be in a better position to make informed decisions when you’re ready to save, borrow, or invest.
When you’re first starting out, you’ll find that not all financial advice is made with your financial situation in mind. A quick Google search will generate tips like how you should cut out that $5 latte you purchase everyday on the way to work. While this might work for those who do have the cash to buy this daily treat, it doesn’t help those who don’t have that kind of money. It’s impossible to cut out a latte you’re too cash-poor to afford in the first place.
If you’re struggling to find advice that matches your lifestyle, check in with the folks at MoneyKey. Because they help their customers find quick and easy online payday loans to cover unexpected emergencies, they’re sympathetic to the financial difficulties experienced by those relying on payday advance loans. As a result, they’ve customized a resource page with sensible advice that works with the tightest budgets. Even those who live paycheck to paycheck can rely on their savings tips, budget walkthroughs, and financial advice regarding loans and credit.
- Treat your credit card like it’s cash
There’s a vitriolic debate on whether cash or credit is better for your financial health, with most experts siding with cash. This position seems logical, as there’s no way you can spend more cash than you have in your wallet or bank account. Credit, on the other hand, advances you possible tens of thousands of dollars that you don’t own. The temptation to spend this credit when you have no means to repay it is irresistible to some, especially because it’s virtual money — it’s easier to part ways with (and lose track of) credit than cash you have to physically hand over.
Since credit cards are essentially high-interest loans, you’ll have to repay what you use, regardless if it’s something you can afford. If you aren’t careful, you can rack up credit card debt, dip into overdraft, and struggle with compounding interest as you fail to repay your debts in full.
While the above outlines what could happen when you use credit cards, it’s the worst-case scenario that overlooks the advantages of using this financial product. When you pay off your debts regularly and in full, a credit card can help you build a healthy credit history. Many of the top credit cards also come with rewards that help you leverage purchases into redeemable Aeroplan points and shopping credits. They may also come with purchase protection and travel insurance.
If you treat credit like cash, you can reap the benefits while avoiding the worst of its pitfalls, gaining healthy credit and rewards without overextending yourself.
Personal finances can be a tricky topic to master, but don’t let your inexperience stop you from taking the first step towards security. Start by following these simple financial tips. Between the right savings, the right advice, and the right products, you’ll be able to make financial security your reality quickly.