Why not make this the year you declare your own independence—your financial independence?
With the annual celebration on July 4th of our country's independence, I think of the benefits to individuals of financial freedom. In my role as a financial advisor, I see people of all ages and lifestyles whose goal is to secure a future that is free from financial worry. What may seem far-fetched can be achieved by discipline and planning.
From FINRA’s Alert Investor, here is a summary of five actions you can take to secure for yourself a stronger financial future:
1. Pay Down Your Debt
If you want to gain financial independence truly, you'll need to work on freeing yourself from debt. The first step toward getting rid of debt is to get a handle on your income and expenses, how much you owe and how much you are paying in interest. When you have an idea where you can cut back and how much you are paying in interest on your debt, it's time to get specific and develop a strategy. Figure out something specific you can target, such as, "pay off at least $250 of my debt every month this year." Then set up an automatic payment to make it happen.
2. Bolster Your Emergency Fund
If you want to master your financial independence, you will need a way to deal with unplanned expenses. One way to accomplish this is to put money aside in a savings account at a bank or credit union expressly for emergencies. It's important to set aside some money—about the equivalent of three to six months of living expenses—to help get you through some of life's inevitable financial surprises.
3. Understand Your Investments
Many investors know very little about their investments. Each broad type of investment—from bank products to stocks and bonds—has its own set of features, risk factors and ways it can be used to help you reach your financial goals. To really get to know your investments, start with an overview of each type of investment you own, and then drill down to information about your specific investments. Don’t don't hesitate to ask your financial advisor for a walkthrough of each investment you don't fully understand.
4. Take Advantage of Free Financial Tools
Whether you're just starting to save or well on your way to a secure financial future, financial tools and calculators can help you set and reach your financial goals. They can also be a reality check on how much you might need to be saving now, so you don't have to play catch up later.
Thinking about retirement? You can start planning now by using the Social Security Administration's Life Expectancy Calculator to help determine how many years of retirement you might need to plan and save for. Then, you can try one or more retirement calculators to estimate how much you'll need to save to meet your reasonable expenses.
5. Check Your Credit
This one is easy and can be done in a few minutes. Everyone should check their credit report—including those who are confident that they have good credit—at least once a year. Regular credit checks can help ensure that the information on your report stays accurate and that you can catch any potential problems early. You can access your free credit report by going to www.annualcreditreport.com or calling (877) 322-8228.
An independent financial advisor can be a trusted ally to facilitate putting a sound financial plan in place today to help you have a more financially secure tomorrow. Have questions? Get in touch today!
Source: FINRA (Financial Industry Regulatory Authority) You can find additional tips in the article.
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.