Having a plan is essential for any situation you face in life, but even more so when your finances are at stake. If you want to achieve an ideal financial future, this is what you need to do:
Establish a budget
A budget is key to manage your expenses and savings. Without one, it’s likely that you’ll end up spending more than you think and saving less than you should.
Start by keeping a record of all your expenses, writing down even the smallest ones, and compare them to your monthly income. Ask yourself: Were all my purchases necessary? Which can I do without? Then, cut out the superfluous, but leave room to give yourself a whim from time to time.
Set financial goals
It will be easier to stick to your budget if you have financial goals that are important to you. Split them between short-term goals (buying a new car) and long-term (saving for your children’s college).
Once you have identified your goals, determine a timeline to reach them. That way you'll know how much to put away each month and what are smart investments.
Then, check your goals occasionally, that way they will always be fresh in your mind. If you get off track a bit, don’t get frustrated or give up. Simply, get back on track and continue working towards your target.
Invest and save
If you’re young, this is the best time to invest, since your money will have more time to grow exponentially. You can start with small amounts of money and take your time. If you withdraw it directly from your salary (paycheck), you probably won’t miss it.
However, don’t underestimate what a traditional savings account can do for you. It’s the easiest way to save money, and it gives you peace of mind knowing that the deposits you make under $250,000 are safe. Plus, it lets you make withdrawals when you need to.
Take out life insurance
Life insurance can prepare you and your family for the unexpected. It can help replace loss of income, help with the mortgage, meet educational needs, or simply leave a legacy for the next generation.
Planning for your child's tuition
Many parents think that they’ll never be able to save enough to pay for their children’s college education. Fortunately, the federal and state government can facilitate this dream with several financial options:
- Savings accounts through a Coverdell Education Savings Account.
- Accounts held under the Uniform Gift to Minors Act or the Uniform Transfers to Minors Act.
Neither State Farm® nor its agents provide tax or legal advice.