How to Prioritize Your Financial Life
By: Kristie Lorette
Everyone has different priorities in life, but your finances should take a front seat rather than a back seat in these priorities. Organizing your financial life and deciding what's important doesn't have to be a burden if you learn how to do it right the first time. Four primary ways to prioritize your financial life include:
Invest now for later
Save for a rainy day
Always pay bills on time
Get out and stay out of debt
In a lot of ways, once you have your financial life on track, it helps you to keep the rest of your life heading in the direction. This is not to say that money makes you happy, because it doesn't. When your money situation is in order, however, it may help to alleviate stress that affects other areas of your life.
Invest Now for Tomorrow
Planning today for what is coming tomorrow is one of the key elements of prioritizing your financial life. As soon as you start working, you should be working to save money for your retirement years. This may seem like a bizarre concept when you are in your early 20s, but because of the way compound interest works (the money you earn on your money), the earlier you start a retirement savings account, the better off you'll be. Even if you can only afford to put $10 into the account once a week or once a month, it is better than $0, and this money will grow over time.
Save for the Unexpected
Life sure does throw curve balls to you along the way. In addition to saving for your future, you also have to focus on saving for the unexpected things that will happen to you in life. Whether your home needs a new roof or one of your family members falls ill, you want to have a pool of savings to either cover all of the costs or help to cover some of the costs. Again, it's not about the amount that you deposit each time, but simply that you consistently deposit funds into an emergency savings fund.
Pay Your Bills
Good credit has always been a cornerstone of a healthy financial life. But it has become increasingly important since the near-collapse of the credit market. Building and maintaining good credit will allow you to save money on life's largest purchases, like a home, car, even furniture and appliances. The most important element of keeping your credit score high or to increase your credit score is to always pay your bills (at least the minimum payment required) on time, every month.
Reduce Debt
Some amount of debt can be a constant in life. You'll likely have a rent or mortgage payment for a long time and you're always going to have to pay for food and utilities. There is, however, a difference between having bills and having debt. To avoid racking up debt, buy items you can afford to pay for them in cash. If you have to make a purchase with a loan or on credit, be sure that it's an amount you can manage (including interest charges).
Whether you've already put your financial life in order or you're still working on setting priorities, Quizzle.com can help with easy-to-use personal finance tools. At Quizzle, you can learn how to get out of debt faster, improve your credit and make better choices for a more secure financial future.
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