Financial stability is an essential part of life for maintaining financial security and providing for our future. It’s easy to get caught up short-term concerns and to put financial planning on the back burner, but it’s something that everyone should be aiming to build, no matter your age or career stage. Here are some helpful tips to get you started.
Create and Stick to Your Budget
Creating a budget can help you focus on the long-term plan while to accommodating the unexpected expenses that will inevitably arise along the way. Start by listing your monthly income and take note of the times per month in which income is received and the frequency of bills.
By accurately tracking your expenses, you can begin to plan and prioritize spending accordingly. Start with the essential—your fixed, recurring bills— then mark out for leisurely spending, such as trips or dinners out.
Next, build in an emergency fund. By setting aside saved money each month, you will have a cushion to dip into in the event of an emergency.
Finally, if you have more than enough to cover your expenses and emergency fund, decide how to allocate your extra earnings. You may choose to funnel the extra funds into investments like stocks, bonds, and mutual funds.
Invest For The Future
Creating an appropriate mix of investments to meet your personal goals and risk tolerance is key for achieving financial stability.
When selecting an investment portfolio, it’s important to consider the type of return you seek, as well as your timeline and risk tolerance. Understanding the basics of investing, different asset classes and how they work in combination will help you make informed decisions when selecting investments to add to your portfolio.
Your time horizon for investing should also be taken into account when creating your portfolio mix. Investing for short-term goals (1-3 years) will look very different from investing for long-term goals (10+ years). Working with a professional financial advisor can help you find the best investments for your particular needs.
Persist For Financial Success
Unfortunately, we can’t guarantee overnight success when it comes to creating financial stability, but you can be sure that persistence pays off.
The best way to stay motivated as you work toward your financial goals is to celebrate successes at milestones, both big and small. Perhaps you’re halfway through paying off a loan—a great moment to spend some time reflecting on how far you’ve come. And when you hit the big wins, like fully paying off a big purchase or finally investing in a portfolio, reward yourself with a well-earned treat.
Finally, if you’re feeling stuck, there’s no shame in asking for help. A financial planner or life coach can help you refocus on your goals, build momentum and break through any impediments that come up along the way.
Building financial stability requires discipline, planning and persistence. But taking small steps to create and stick to your budget, invest for the future, and stay motivated throughout your journey is absolutely doable. When armed with a plan, little actions over time will set you up for long-term financial success.