Your financial health is the foundation of your life. It’s important to ask these five questions at least once a year, but they are worth revisiting every month. Do you have an emergency fund? Have you paid off all your high-interest debt? Have you maxed out on retirement contributions for the year? What is your net worth and how does it compare with where you want it to be in six months or one year? Are there any red flags that could cause problems later down the line if not addressed now (e.g., credit cards)? If so, what steps can you take today to start fixing them before they become major issues tomorrow?
“Do you have an emergency fund?”
An emergency fund is something that you want to build up as soon as possible, well before any emergencies arise. Contrary to popular belief, it’s not about having enough money to cover six months or a year of expenses; the real goal is to create a financial cushion for all potential crises. For many people, one month’s income is often sufficient.
When the unexpected happens, it can be hard to figure out how you’re going to come up with the money necessary for emergency expenses. If you don’t have an emergency fund set aside, now is a great time to start one! The majority of Americans are not prepared at all for emergencies and this could end up costing them dearly if they lose their job or suffer some other setback that requires outside assistance. Your best bet is to put aside 3-6 months worth of living expenses into an account that will provide funds in case your income isn’t enough.
“Have you paid off all your high-interest debt?”
If you’re paying more than 1% interest on something, think about paying it off sooner rather than later. You can also refinance debts at low rates or sign up for automated payments that will help ensure that the balance doesn’t get out of control. Credit card rates, for example, can go as high as 20%. They’re also a risk to your credit scores.
Your emergency fund is the difference between a life of financial security and one lived in fear. If you don’t have an emergency fund, it’s time to take some steps today so that you never need to worry about not having enough money on hand when something goes wrong. Take charge of your finances by starting with these four simple tips for building an emergency fund from scratch or just getting back on track if you’ve fallen off course recently!
“Have you maxed out on retirement contributions for the year?”
If your retirement contributions for the year are maxed out, you may want to consider contributing more. You can always go back and make changes in future years without penalty- which is why it’s worth making sure that you maximize this opportunity now! Let us know if we can help with any questions about how much money you should be saving or other financial topics related to your retirement goals like taxes, investing, inheritance planning etc., as our team of experts would love to partner with you on these important decisions. And don’t forget – every dollar counts when it comes to putting away funds early for a comfortable retirement later down the line!
It’s important to make sure that you maximize your 401k and IRA contributions. When adjusted for inflation, $18,000 per year is what you can contribute to these accounts at most, so after the first $5,500 ($6,500 if you’re 50 or over), it’s important not to pass up that opportunity. You can further increase your retirement contributions by automatically deducting pre-tax dollars into a Roth IRA.
“What is your net worth and how does it compare with where you want it to be in six months or one year?”
It’s time to take a look at your income and assets. You should be able to set financial goals that are realistic for the next six months or year, based on where you want them to be in 12 months. This way, you can create actionable steps with clear deadlines around what needs to happen each month so that by one year from now you will have reached your goal of increasing net worth! What is your current net worth? Where do you hope it will be in 6-12 months?
To calculate your net worth, add up everything you own and subtract all of your debts. If the result is positive, congrats! If not, figure out why. Credit scores are an excellent predictor of financial health because they incorporate many factors related to how a borrower manages credit accounts. The higher your score, the easier it will be to get a loan or a better rate on a loan you already have.
“Are there any red flags that could cause problems later down the line if not addressed now (e.g., credit cards)?”
The decisions you make today can have a huge impact on your financial future. As the credit card industry continues to evolve, it is important for you to stay informed about new regulations that are being put into place and how they may affect your business’s practices in the long run. Don’t wait until something bad happens before you start taking action! Keep an eye out for these red flags so you know when there might be trouble ahead. It will help keep your customers safe too!
If your expenses are greater than your income, you’re likely to struggle with debt. A simple solution is to pay yourself first by having money deducted directly into your savings account before you even see it. Another is to stop using credit cards and instead use debit cards or cash; that way there’s no temptation to spend more than what’s in the bank.
“If so, what steps can you take today to start fixing them before they become major issues tomorrow?”
If you have been wondering what to do with your old, unused junk that has been piling up in your garage or basement, the answer is simple. Get rid of it! What’s wrong with a little clutter? Well, if left unchecked and unattended for too long, this can lead to major issues like pest infestation and mold growth. To avoid these costly problems from occurring at all costs, follow our helpful steps below on how to get organized today before they become a huge issue tomorrow. Your wallet will thank you!
If, for example, you’re struggling with credit card debt, there are a few ways that you can approach this. You might set up an automatic payment system to maximize your payments every month. Or you could switch all of your bills over to paperless.