How to jump-start your financial strategy for retirement
As you think about your retirement strategy, now is the time to get your finances in the best shape possible. Here are some financial strategies for retirement that can help make your dreams a reality:
Take a financial “selfie” – Take a financial snapshot to capture the state of your current finances. Do you know how much you earn and spend each month? Do you have enough cash on hand to pay your bills on time? Are you weighed down by excessive debt? List all your assets (what you own) and liabilities (what you owe) and then subtract your liabilities from assets to determine your net worth. How does it balance out?
Be goal-oriented – Think about the ideal financial situation you want to enjoy in the future and go for it by setting achievable goals. For example, you might decide to pay off your credit card debt in one year or build an emergency cash reserve of $15,000 over the next three years. Monitor your progress and hold yourself accountable.
Pay yourself first – Whether you are saving for your retirement or building an emergency reserve, put aside money every month to reach your goals. This way you’ll have less cash to spend on discretionary items and you’ll make faster progress.
Separate needs from wants – Review your spending habits, especially for discretionary items, and ask yourself, item by item, ‘Is this really necessary?’ Could you drive your car another year or two? Dine out less often? Turn the thermostat down a notch? Keep your long-term goals in mind so it seems less of a sacrifice.
Bundle, buy generic, and go green – One way to build savings and retirement funds is to be a smarter consumer. To cut grocery costs, buy certain items in bulk, shop less frequently, clip coupons, look for sales, and buy generic items when feasible. Could you save money by bundling services such as telephone, television and internet access? If you and your spouse both have cell phones, do you need a landline? Look for energy-efficient appliances, consider energy-proofing to cut your heating bill, and look at driving a more fuel-efficient vehicle or car-pooling.
Tap into your biggest asset –Although your home is primarily a shelter, it’s also a financial asset. You build equity as you pay down your principal. Used wisely, a home can be a powerful financial tool. Home equity can help you pay college tuition, consolidate high interest rate debt, or make home improvements. Consider refinancing your mortgage if you can lower monthly payments enough to recoup refinancing costs in three years or so.
Break free of debt – Easy to say. Hard to do sometimes. But the fact is, funding your retirement is more manageable if you’re not carrying a heavy debt load. Today is the day to take a step in that direction. Draw up a budget and stick to it. Buy only what you can afford. Visualize how good it will feel to be debt-free. Consider getting support through reputable credit counseling.
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2021-128381 Exp. 10/23