What's Your Financial Focus Right Now? - Accounting Accidentally

Your personal finance priorities may change dramatically over time.

In your 20s, for example, you may be paying off student loan debt and saving for a home. If you have children, your financial priorities will change. From there, people in their 40s and 50s typically save more aggressively for retirement.

There are some basic concepts that should serve as the foundation for your personal finances, regardless of where you are financially. Consider focusing on these factors at each stage of life:

Contents

What About Debt?

Always be aware of your total amount of debt, and how you’ll manage the payments.

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Where you can, you need to avoid getting into more debt like the plague. If you do carry debt, here’s a plan to reduce your debt over time:

Create a personal budget, and consider making spending cuts in areas of variable spending, such as meals and entertainment

Use the money you save to fund a savings account for emergencies- which will reduce the need to borrow for an unexpected event, like a car repair. Creating a savings plan can give you some peace of mind.

Once you build a $1,000 savings balance for emergencies, start paying down more than the minimum payment on your debt. Determine which debt has the highest interest rate, and pay that debt off first.

Once the highest-interest debt is paid off, use the available dollars to pay even more on a second debt. Move through this process until all of your debts are paid off.

If you’ve had a financial setback, this article can help.

Income Decisions

To help debt management- or even as its own separate goal (for those of you not in debt)- earning more money can make a huge difference.

Use this site to apply for a loan Find My Rate at Social Finance Pay off credit cards or invest in a major purchase

Sit down and work out how you can get a promotion, or earn money on your own. Do you have a skill you can charge for, or do you want to launch products? Think about what you can do to start earning more money as soon as possible.

Start small. The Internet makes it possible to try out a business idea, and invest a small amount of money to see if your product or service concept will work. If things don’t work out, you haven’t invested a great deal of money.

Many people try a business idea, and then tweak the idea based on feedback. It’s a smart way to start a new venture.

Brick and Mortar

Then, from here, you might want to think about property. If you haven’t bought your first home yet, this could be on the radar for you- or maybe you want to look to real estate as more of an investment. Either way, if you want to focus on property, then you need to work out how much money you need, and create a plan for getting it.

Many freelancers and business owners may have times when cash flow is a problem. Use this site to apply for a loan Find My Rate at Social Finance in order to cash flow your business until you can collect receivables from customers.

The Unknown

If you haven’t yet thought about your future, then this should be next. It’s so important to be thinking about how you’re going to pay for your life when you’ve retired. This doesn’t have to be a traditional retirement option, but you do need to think about how you’re going to do it.

Your company 401(k) plan may be the best investment available to you, if your employer matches investment contributions that you make. Start your investing journey by checking on your employer’s retirement plan, if they offer one. If you don’t have access to a plan, there are attractive retirement plan options for the self employed.

Stick to it

Staying on track financially may be as hard as starting the process. Check on your spending each week, and assess your finances on a monthly basis. With planning and self discipline, you can improve your personal finances.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

Image: Bullseye, Jeff Turner CC by 2.0