Being financially stable in the present is one thing, but ensuring that you’ll have a financially stable future requires a little more preparation. You need to start thinking of ways to protect your income (or a sizeable portion of your income) so that you’ve got something to enjoy in your retirement years or something to put your kids through college. Here’s some advice on safeguarding your money for the future.
The first step to safeguarding your money for the future is to get organized. You need to have a good overview of your financial situation. Make a budget by tracking your expenditures for one month. You most likely know the cost or your rent and utility bills, but you need to work out how much you spend on necessities such as food, gas, and so on. Once you’ve worked out all the costs for an average month, you’ll know how much of your income goes on those necessities. The money that remains is your disposable (excess) income. This should be going towards savings or the occasional non-essential purchase. But if you want your excess income to be more substantial then you should find ways to spend less on necessities. This doesn’t mean you have to compromise; you could just reduce your energy bills by insulating your house, for example. Or you could walk to town more often so that you don’t waste gas.
Prepare for unexpected situations.
Whilst a budget is a good way to protect your personal finances from bad spending habits and to make sure that you set aside enough money for the costs you can predict (e.g. rent or energy bills), you need to think about the costs in life that you can’t predict. You never know if your car is going to suddenly break down, for example, and need a costly repair job. But what you can do is prepare for such incidents by setting aside an emergency fund for rainy days. Factor this into your budget; make sure you set aside a small percentage of your monthly income and put it straight into your savings account.
Of course, if you’re already dealing with a situation such as an injury that has temporarily put you out of work then there are still ways to create a last-minute financial safety net for yourself. You might want to seek consultation with a personal injury attorney if this is the case because you could be due compensation. It’s important that you protect your finances when unexpected situations come your way. If something unexpected has already happened then damage control needs to be your priority.
Let automation take over.
Of course, the best way to get your finances in order for the future is to use an automated system. Perhaps you struggle to save money because you frequently give in to temptation and splurge on things you don’t need, but automating your finances could help to stop this never-ending cycle. If you set up an automatic transfer of funds from your bank account to your savings account on the day on payday every month (or every week) then you won’t have to resist the urge to spend money on luxuries. A small sum of your earnings will automatically be put out of reach, and your budget can account for the income you have after those savings have been deducted. It’ll teach you to be more fiscally responsible with the remaining funds in your main account. You’ll also have a growing savings account that’ll help you in the future.