5 Important things to consider to create a healthy financial future
Written by: Danyelle Hudson, Rappahannock United Way, Community Impact Prosper Trainer/Mentor
- Be aware of your income and expenses
One should always be aware of how much money they have coming in (income) and how much money they have going out (expenses). It’s helpful to do a monthly budget, writing down monthly income and expenses to be aware of your monthly remaining balance (the amount of money one has left over after subtracting expenses from income/deposits).
- Set a date to update your monthly budget
Set a recurring date each month to review and update your budget. Income, expenses and due dates change. It’s helpful to review your budget on a set date each month so that your budget stays up to date and reflects your most current income and expenses.
- Try your best to always have a savings/emergency fund
Generally, it is wise to have three to six months of living expenses in a savings account. It would be a great addition to have these funds in a high-yielding account to accrue interest. Be sure to research the high-yielding account to be aware of when a withdraw can be made and if the withdraw would be taxed at any time. Also, research the interest rates on these accounts and whether they fluctuate or are consistent.
- Plan for retirement as early as possible
Its best to work backwards for this financial tip. Map out your ideal living arrangements for after you retire. How much will this cost? What is the monthly breakdown of this cost, and for how many estimated years? It’s easier to make a present-day plan when you have specific future goal. If available, invest as much as possible in your employers’ retirement plan with the maximum company match, if offered.
- Enjoy the fruits of your labor
Its easy to focus only on paying bills, adding to savings, saving for retirement and using your income for only the basic needs of daily living. Sometimes we forget to enjoy our money. We work and should be able to buy and spend our wages on things other than rent, mortgage, groceries, gas and all other costs of living. It’s also important to use our money for our indulgent (in moderation) pleasures.