The biggest impact you can have on your financial wellbeing is prioritizing a savings plan. People often see saving as a huge sacrifice, without fully comprehending its long-term benefits. The inflation rate of education and medical costs are consistently higher than the average inflation rate. By prioritizing a savings plan you can help to offset the impact these increases will have on your monthly budget.
It may seem hard, but good saving practices are actually quite easy to adopt, like adjusting your monthly contributions, keeping up-to-date with Investment and Finance news or even seeing a financial advisor regularly. The minimum contributions required by retirement annuities and unit trusts are actually lower than the monthly satellite TV subscription. It’s a matter of what you want versus what you need.
The most powerful tool at your disposal is compound interest, but it does require time. This means that, by starting early, your money will have more time to grow.
Consider investing in a retirement annuity
Retiring comfortably will take considerable planning. Time and discipline ensures that the plan will be effective. Governments will often offer tax incentives if you’re invested in a registered retirement fund. Retirement annuities are an excellent way to invest a portion of your income. The growth of your savings will depend on how much and for how long you save. Starting early will dramatically increase the influence of growth on your contributions. So start early and save a bit extra when you can.
What should you do with a windfall?
In the current economy, we find that large increases are no longer a certain thing. Financial windfalls allow you to move your financial plan forward in sizeable steps. For those of you fortunate enough to receive bonuses or a large inheritance should consider investing all or a large portion of it. Weigh out all your options and find one that fits your long-term goals.
Investing for the unexpected
It is difficult to predict the future. You may require some extra money for medical expenses or you may be presented with a fabulous business opportunity, which requires some capital. You may have to consider the ever-increasing cost of education. These costs can be crippling if not planned for in some way. Building up an “investment buffer” will allow you to protect yourself against these unexpected surprises. If you spend all your money, you will eliminate this option.
It’s never too late to develop good savings habits and it can only benefit you in the future. Carefully analyze your current financial situation and define your goals for the future. This will help give focus to your plan. If you’re overwhelmed then consider visiting a financial advisor to help you make the more complex decisions. Don’t procrastinate any longer. Define your path to future financial freedom.