It’s no secret that the road to financial security can be a long and winding one. There are a lot of factors to consider, and it can be tough to know where to start. So, here are some tips to get you started on the path to financial security.
Set aside money for unexpected medical expenses.
No one wants to think about unexpected medical expenses. Still, the truth is they can happen to anyone at any time. A broken bone, a serious illness, or even the need for tooth replacement surgery can all come unexpectedly.
That’s why it’s so important to have an emergency fund for unexpected medical expenses. An emergency fund is exactly what it sounds like—a reserve of money you can tap into in case of an unexpected event or expense. Having one can help you pay for things like deductibles, co-pays, and even non-covered services.
On that note, an emergency fund is especially important if you don’t have health insurance or if your health insurance has a high deductible. In these cases, even a small medical expense can cost you a lot of money. But if you have an emergency fund in place, you’ll be able to cover these costs without putting yourself in financial jeopardy.
There’s no hard and fast rule for how much you should save in your medical emergency fund. However, a good general rule of thumb is to save enough to cover 3–6 months’ worth of living expenses. This may seem like a lot, but it’s important to remember that medical emergencies can often lead to lost income if you’re unable to work. By saving 3–6 months’ worth of living expenses, you’ll ensure that you have enough money to cover all your costs—medical and otherwise—if something happens.
Make a budget and stick to it.
Creating and following a budget can help you make informed decisions about your money, reach your financial goals, and improve your overall financial health. There are many different ways to budget, but one of the simplest and most effective is the 50/30/20 budget. This budgeting method divides your after-tax income into three categories.
50% of your after-tax income goes towards necessities like housing, food, transportation, utilities, insurance, and minimum debt payments. While 30% of your after-tax income can be spent on wants like entertainment, travel, dining out, subscriptions, and shopping. And the remaining 20% of your after-tax income is split equally between savings and debt repayment. This includes building an emergency fund, contributing to retirement accounts, and paying off credit card debts and student loans.
One of the benefits of the 50/30/20 budget is that it’s flexible. If you’re struggling to stick to the 30% allotted for wants, you can lower it to 20% or 10%. Similarly, if you can save more than 20%, you can increase your savings rate to 30% or 40%. The key is to find what works for you and stick to it.
Another benefit of this budgeting method is that it forces you to think about your spending in terms of priorities. Needs will always come first, followed by wants, and then savings and debt repayment. This can help you curb unnecessary spending and make sure that your money is going toward things that are truly important to you.
Invest in yourself.
Many people think that to make more money, they need to find a higher-paying job. However, the real key to increasing your earnings potential is to invest in yourself. Investing in yourself means taking the time and energy to expand your skillset so that you can provide more value to your employer or to your own business. When you provide more value, you will be rewarded with more opportunities and greater financial stability.
There are many ways to invest in yourself. One way is to take some time each week to read industry-related articles or books. Keeping up-to-date on current trends will make you more valuable at work and better equipped to start your own business.
Another way to invest in yourself is by taking classes or attending seminars related to your field. These activities show employers that you are motivated to improve your skills and stay ahead of the curve. They also allow you to network with other professionals who may be able to help you further your career.
Finally, another way to invest in yourself is by taking care of your health. Buying and eating healthy food and exercising regularly will not only make you feel better, but it will also increase your productivity and longevity.
Achieving financial security is no small feat—but it’s definitely achievable with some hard work and dedication. By following these solid tips, you’ll be on your way to a bright and stable financial future in no time!