What are your financial goals? Are you looking forward to saving enough for a down payment on a house? Maybe your goals are more short term and involve saving up for a special vacation that you have always dreamed of. No matter what your financial goals are, you can definitely profit by paying attention to the following points of personal finance.
Periodic Quick Checks
Checking in on the status of your financial health does not need to take up a whole weekend. By making quick checks on your finances at regular intervals four to six months apart, you will stay familiar with how your investments and debt payoffs are doing. Ask yourself if your financial results from the last few months are on track with your goals. If you are falling short of where you intended to be, what aspect of your plan is underperforming? Identifying the problem and where need to make adjustments so that your next results will measure up to your plan is a necessity.
Sometimes financial goals need to be adjusted, and that is alright. Unexpected good and bad things happen in everyone’s lives that necessitate a change of plans. Losing a job and going a few months before being rehired will change monetary priorities temporarily. Having an addition to the family or inheriting wealth will necessitate adjustments as well. Being honest with yourself and confronting those issues as part of your periodic checks will help you stay on point.
The Powerful Habit of Saving
Investment advisor Patrick Dwyer advises to make saving in a company sponsored 401k program a priority. Make sure that you are saving enough to get the maximum match contribution from your company. Regular investment from early on is a must to begin to accumulate and build on your returns. Making saving something automatic that comes out of your paycheck before you see it is a helpful strategy. Do not postpone starting to save for your retirement because you have other demands on your money like student loan repayment. Even if it is a very small amount that you can afford to save, it will add up over time with the power of compounding.
A Balancing Act
Make sure you know how your company’s 401k plan matches your contributions. Is it with company stock? If so, you will want to check what percentage of your 401k investment is in company stocks. What percentage of your 401k to keep as company stocks is a fluid number, but this source from Forbes recommends keeping company stock as no more than 10 to 15 percent of your holdings. Whatever percentage that you choose as your threshold, periodic rebalancing of your 401k account will be a necessity. Rebalancing your investments, in general, will need to be done periodically if a certain sector you are invested in is underperforming.
Keep Your Profits in Mind
Many people find it helpful to think of their savings as a profit. In a personal finance perspective, profit is defined as your income minus your expenses. To raise your profit level and have more money to save you can spend less of your income by refinancing your home or economizing on food and entertainment. You can also raise your profit level by earning more income by finding a higher paying job or developing a side gig. Some especially motivated individuals do both to really accelerate their profit level. Having a profit margin in your personal finances allows you to put extra money into savings and pay off debt at a heightened rate.
The higher the profit margin, the more you can save towards your long term financial goals. Whether you want to retire early or be able to pursue your hobby as a second career, you can accomplish this by paying debt down and building savings up. Building up net worth requires years of having a positive profit margin. You do not have to have huge amounts of profit each year to benefit from this. Just the fact that you are putting your profit into savings each year is a huge positive step. Building up net worth requires years of having a positive profit margin. When income is more than expenses, then your net worth has the opportunity to grow.
What Are Your Net Worth Goals?
Have you ever calculated your net worth? You can by using this link. Your plans for future net worth need to be a factor in shaping your long term financial goals. Many factors can go into projecting net worth into the future such as return on investments, but viewed at its simplest, net worth is what you own minus what you owe. The more instances that you earn more than you spend, the more chances you have to continue building your net worth.
By making sure to check your financial course two or three times per year, you are making an investment in the future. It takes many little steps over time to optimize your attaining financial independence, but it can be done.