The Second Foundation In Personal Finance Is Creating A Savings Plan.By BenOni | February 20, 2023
This is easier said than done for many people. They either don’t make enough money to save or they have too much month left at the end of their money. The key to creating a savings plan is to make it automatic. The best way to do this is to have a certain amount of your paycheck deposited into a savings account each pay period. This way, you never even see the money and it’s not burning a hole in your pocket.
If you have a 401k plan at work, make sure you are contributing enough to get the employer match. Employer matches are free money and you should always take advantage of free money. If you don’t have a 401k plan at work, open a Roth IRA. A Roth IRA is an individual retirement account that you fund with after tax dollars.
This means that you will not get a tax deduction for the money you contribute, but the money will grow tax free and you can withdraw it tax free in retirement. The best place to open a Roth IRA is at a discount broker like Vanguard or Fidelity. They have the lowest fees and they are very user friendly.
The third foundation in personal finance is creating a budget. This is where many people fail. They either don’t know where their money is going or they are too afraid to look. The key to creating a budget is to find a system that works for you and to stick to it. There are many different budgeting systems out there. You need to find one that fits your personality and your lifestyle. You also need to be willing to adjust your budget as your life changes. The best way to find a budgeting system is to do a search on the internet or to check out some of the many budgeting books that are available.
The fourth foundation in personal finance is investing. This is where most people get scared. They think that they need a lot of money to invest. This is not true. You can start investing with very little money. The key to investing is to start early and to invest regularly. The best way to invest is to start with a mutual fund. A mutual fund is a collection of different investments, such as stocks and bonds, that are managed by a professional. The advantage of a mutual fund is that it is diversified, which means that it is less risky than investing in just one stock. The best place to invest in a mutual fund is at a discount broker like Vanguard or Fidelity.
The fifth foundation in personal finance is insurance. This is something that many people don’t like to think about, but it is very important. Insurance protects you and your family in case of an accident or illness. There are many different types of insurance, such as health, life, and disability. You need to make sure that you have the right type and amount of insurance for your needs. You also need to make sure that you are getting the best possible price for your insurance. The best way to do this is to shop around and to compare rates.
These are the five foundations of personal finance. If you can master these, you will be well on your way to financial success.