4 Pieces of Financial Advice You Cannot Ignore
When you search for financial advice, Google search results bring in a plethora of advice and tips. While it’s easy to ignore misguided dating advice at family gatherings or humdrum conversations between family and friends, financial advice cannot be risked. Whether it’s a family member, friend, boss or a professional adviser, you’re likely to receive a ton of tips for managing your finances and investments; however, not all these tips are worth following.
For your ease, we have compiled the best financial advice that should never be ignored and will prove to be worth every penny.
Have a plan
A plan acts as a guide throughout your financial journey and even if domestic and global upheavals dent your investments, it will help you get back on track. At a small level, planning affects every aspect of personal finance, whether it be through taxation, insurance or achievements. A good and successful plan is one that helps you cut losses, enhance gains, and avoid the pain and panic of a financial or life stage crisis.
A plan is a simple matter of listing out your needs and wants, and deploying the money in the right avenues so that you have it when you need it. The first step to every plan should be to calculate your existing money and identify your goals for the future. Calculate the exact amount required for each goal after factoring in inflation and the time horizon in which you want it.
Keep track of your spendings
Keeping tabs on where your money is going, whether fixed expenses like rent or mortgage payments and transportation costs or discretionary spending like dining out and traveling, is a crucial part of mastering your money. Setting up a spreadsheet or using a service like LearnVest or Mint can help you make cuts where necessary and even set you on a path to early retirement if that’s what you’re after.
Invest in the stock market
No one can accurately time the stock market for inflation or a huge decline; it’s bound to bounce over when it’s supposed to. A smart idea for investing is to put your money in low-cost target-date retirement funds. These diversified funds automatically adjust their asset allocation and risk exposure based on your age and retirement horizon. Success in investing comes with understanding one’s risk tolerance, constructing a diversified portfolio, and staying long term.
Build an emergency fund
Life is completely unpredictable, even if you are able to time the stock market, you are less likely to be able to time your downfall, it could be in the form of unemployment or home repair, car repair, child expense, or even a medical emergency. Things are likely to go wrong whether you plan every move in your life or keep a positive approach to life.
If there’s anything you can count on, it’s that life is filled with unexpected changes. Hence, most financial planners suggest building an emergency fund that could cover six to nine months of expenses. If you don’t have to save at the ready, you are leading yourself and your family to the risk of completely relying on friends and family for financial support, debts, or loans.
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