There’s never a wrong time to begin saving for your future. While we can plan for certain expenses, it’s crucial to be prepared for as many financial situations as possible. Simply put — saving money is the only way to reach your goals, no matter how big or small.
No matter where you may be in your financial planning journey, the smallest investments will often yield the greatest results. Developing healthy spending habits and taking advantage of the resources available online offer even the most novice savers the opportunity to create a truly secure financial future.
We’re offering recommendations that are designed to help your future-self stay ahead of your finances.
Reducing Student Loans
Student debt has become an increasing financial burden on graduates and paying it down can feel like a never-ending effort — but there are plans you can put in place to become debt-free that can be tailored to your situation.
One of the most straightforward ways to pay down your debt is to make more than the minimum payments. It’s easier than it might seem — consider how much you spend on takeout or coffee at your local cafe. If you trim your spending to include only your necessities, at least for the time being, you’ll be able to contribute more to your debt payments and find yourself ahead of schedule, leaving you more freedom in the future to enjoy your money.
If you have multiple payments to make, you may want to consider refinancing your loans. This encompasses one large loan that you can use to pay off your existing debts, leaving you with only one monthly payment to keep track of. Since it’s a private loan, you’ll need to prove you have enough income to afford the loan and that you have good credit, or that you have a reliable co-signer.
Enrolling in an auto-pay plan might serve as an option if the refinancing doesn’t work with your situation. It’s worth researching your federal student loan service or potentially private lenders to inquire if they offer auto-pay deductions — it could lead to an interest rate discount.
If finding a traditional lender is proving difficult, an alternative lender such as Goday.ca might be able to help you in the short term, providing you the cash you need to deal with immediate financial issues. Of course, loans of this type should never be relied on as a long-term financial strategy.
Your Rainy Day Fund
More often than not, unexpected expenses will arise — whether it’s a cost associated with your vehicle, health complications, or perhaps a necessary renovation within your home. No matter the circumstance, having a nest egg set aside will offer immediate ease and help you move through this phase without worrying about your current finances or relying on credit cards for assistance.
The amount you should have saved can vary depending on your circumstances, but it commonly falls under three to six months of expenses. Typically, a high-interest savings account is the most effective tool to store these funds — it offers a separate account so you’re not tempted to use it in your daily life, but it also offers easy access should you run into an unexpected expense.
If it works for your situation, there is the option of a high-yield savings account, which will keep your money insured up to a certain amount while it earns interest and offers the same efficient access.
It’s recommended that you set up automated payments into your savings account — you’ll establish good habits and building this account won’t seem as daunting. You’ll be surprised at how much you can accumulate when you save up your change, or by stashing away any bonuses or raises you to earn at your job. Budgeting just takes a bit of discipline and self-awareness, but here are some basic financial tips to help you stay on track.
Saving for a House
Purchasing property is an important milestone, one that takes time to achieve. During the process, you’re expected to have a percentage of the cost ready as a down payment. The down payment acts as insurance for your lender and ensures that you’re able to make your monthly mortgage payments.
Before you can attend open houses or meet with a real estate agent, you’ll need to know the type of house you can afford and that depends on how much you’re able to put towards the down payment. The standard often falls between 10-20 percent.
The most common recommendation is to spend no more than 25 percent of your monthly income on your mortgage payment. This will lead you to calculate your total mortgage amount, and you can then come up with the number you’ll need in order to make an offer on a property. Creating a separate account dedicated to your down payment will help assuage your temptation to spend any of those extra funds.
Prepare for Medical Emergencies
Unexpected medical bills can leave a detrimental hole in your finances if you aren’t prepared. This is one of the most crucial components of an emergency fund. This money should remain liquid, meaning you can access it quickly. But you should also keep it separate from your general expenses so you’re not inclined to take even the smallest amount for a non-emergency.
You’ll want to go over any deductibles and any potential copays or coinsurance before you can calculate the amount you may need to contribute. The most strategic way to tackle this budget is to add any fixed premiums and your own expenses while considering any expected elective procedures. You’ll then add this to the sum of those fixed premium expenses, divide by 12, and you’re left with a monthly estimate that you should be contributing to your emergency fund. If you’re worried about these funds mixing with the rest of your savings, consider creating a sub-savings account to keep it separate.
When it comes to your finances, establishing your long-term goals creates a framework to which you can then research and prepare for the next steps. Whether you’re looking to invest in a major purchase or you want to stay ahead of unexpected financial burdens, focusing on your future requires making investments today.