Working hard each day to take care of ourselves is a pretty universal concept. We go to work, pay our bills, take care of our families and largely live in the here and now. It can be hard to think outside of the current day because so much requires attention on a daily basis.
Nevertheless, it is vital to consider what will be in ten, twenty or even fifty years. All too many people fail to consider how their futures will be impacted by savings – or the lack thereof – and investments made in earlier years. The future always feels a long way away, but that’s hardly ever true.
As it turns out, there are things everybody can be doing right now to ensure that their financial future is better than their financial past. If you haven’t taken steps to safeguard your investments, income and retirement, now is the perfect time to begin. Today, we’ll review some things you should be doing right now to plan for that brighter financial future.
Take Care of Yourself
It might not seem the case, but the biggest investment in your financial future is yourself. In our earlier years, we don’t have to worry about sickness, disability and other ailments that can significantly impact our earning potential. Many people feel invincible during these years, only to find out later that those bad decisions in their earlier years played a role in their present situation.
Younger people, in particular, have plenty of time to begin saving and investing. It’s okay to have fun in your younger years, but be cautious about the decisions you make. Your earning potential in later years – often when we make the most money – can be significantly impacted by bad decisions such as obesity, addiction and other physical illnesses.
It’s important to schedule regular check-ups with a medical professional to ensure that everything is OK; to ensure potential illnesses are caught early. Additionally, it’s vital that you avoid bad behaviors that can lead to even worse habits that potentially reduce the number of productive years we have to work and invest.
Diversify Your Investments
In order to ensure that your financial future is as well-balanced as possible, you should be considering multiple pathways to financial prosperity. There are a number of investment plans and strategies that can be used to slowly but surely build a solid financial future, with each having their own benefits.
Whether you’re considering a Roth IRA, 401k or 457 plan, keep in mind that all of these have benefits and should be considered in any well-balanced portfolio. Spend ample time figuring out how much you’ll net over the long-term with a 457 calculator, what penalties exist with an IRA and how much your 401k investments can yield in a given period of time.
Additionally, you’ll want to review options that pertain to stocks, commodities and other forms of investments. In any given year, market forces can impact (positively or negatively) a variety of different investments: by being as diversified as possible, you’ll avoid any unnecessary losses to your long-term investment potential.
Invest Short-term for the Long-term
Miniscule contributions to retirement and investment plans may not seem like much when looking at them each week, but every little bit adds up. This is a big part of why so many fail to invest: small contributions here and there seem fruitless in the long-term.
However, it is precisely these small contributions that add up over time and give you a comfortable investment portfolio. Whether you can contribute 10% of your income each week or just 1%, be sure to invest in the short-term for long-term gains. As time goes on, these investments will exponentially increase in value and ensure that you’re not caught in your later years without a retirement package.
As the years progress and our incomes increase, it can be all too tempting to spend more in order to enjoy a more luxurious lifestyle. This, however, is exactly the opposite of what you should be doing with investment in mind.
Our contributions in our earlier years are generally smaller but can grow over a longer period of time into a solid foundation for investment. In our later years, investing larger sums of money that’ll inevitably yield lower rates balances out things. When your income increases, it is wise to divert as much of those gains as possible to your investment portfolio. A financial planner can help guide you into diverting the right amounts to the right plans, but the important part is to ensure you’re increasing your contributions with age rather than decreasing them.
Accept Free Assistance
It is not uncommon for companies and businesses to provide their employees with a variety of financial planning services. In many cases, it makes sense to consult with your employer on what specific services are offered, and use them if applicable. This assistance can help you make the right decisions for your future planning with little to no costs to you.
On top of that, many employers also offer contribution matching for one or more retirement plans. For instance, 401k matching is rather common. If you hadn’t previously planned on investing in a particular plan, but your employer provides assistance or matching contributions for it, then take them up on their offer. Whether your employer offers matching funds for 1% or 5% of contributions, it is essential that you accept free money and advice for your financial future wherever possible.
With the future seemingly so far away, many of us are willing to put off investments until a later date. Not only is this a bad idea, but it isn’t necessary: even the smallest contributions made today will begin to grow exponentially over time. By accepting free help and contributions, spending frugally as you age, always making some form of short-term investment, diversifying your portfolio and taking care of yourself, you’ll be building the foundation for a strong and prosperous financial future.