Say the term "financial planning," and no doubt many people will give you a blank stare. However, no matter who you are, financial planning is something that you need. Even though it might seem like something you can't get through without a degree in accounting, that's not true. There are financial planning tools that can help. Here are some ways to get started.
First and most importantly, you need to have a good budget in place, and you need to follow it. There is no way to reach your financial goals without a budget to help you reach them. Having a budget will help you allocate money such that you can pay your debts and plan for the future at the same time.
Next, you need a savings account. Although other investments are important as well, a savings account should be an easily accessible place for you to put liquid cash and earn some interest at the same time. You can check with your bank or go online to find savings accounts with the best interest rates. In some cases, these accounts will have tiered savings rates, which means that the more you save, the higher your interest goes. Different plans exist for people from all walks of life, so don't be afraid to save even "just a little." It will get you in the habit of doing so and before you know it, you have substantial savings that you saved painlessly.
Keep on top of your credit report. There are several websites that offer you access to your credit report for a fee. This is usually a nominal fee and is worth it to be able to see what is happening on a regular basis. This financial planning tool will help you spot any unauthorized reporting and keep you from becoming the victim of identity theft.
Managing your debt can be daunting, but there are a few financial planning tools that you can use to make it easier. Credit cards are a way of life in today's world. You can use the extreme competitiveness of credit card companies to your advantage. Only carry a few cards, and make sure that those cards have the lowest possible interest rate. Many cards will send you balance transfer offers that allow you to transfer a balance from another card at a very low rate. Be sure to take advantage of any reward programs that are offered so that you can get the most from your purchases.
Next, you probably either pay rent or have a mortgage payment. Of the two, a mortgage payment usually the better deal, since you can usually deduct the interest you pay on your mortgage from your taxes. Therefore, this type of debt is what is known as "good" debt. It is probably prudent of you to check regularly and see if you can refinance at a lower rate than you have currently, answer financial picture changes. Refinancing will not only save you on your monthly mortgage payments because of lower interest, but if you roll the difference in payments into your mortgage, you'll also cut your loan amount at least somewhat. Again, in most cases, it's not a good idea to take the extra money you get from refinancing and spend it on something else. Rather, roll it into your mortgage so that you get that savings right away in the amount you owe.
One of the greatest financial planning tools for anyone is to have a good retirement plan. If you are working, you should be contributing to your employer's 401K plan. You should have a diversified plan that will allow you to save enough for retirement while still allowing you to meet your current obligations. The earlier you begin, the harder your money will work for you.
Good financial planning tools will allow you to manage your money wisely. Taking advantage of all of the resources available to you is the smartest thing you can do when you are looking for financial planning tools. There are many options out there both on the web and at your financial institution that will help you get the most out of your money.
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