One of the most staggering statistics of the modern world lies in the fact that about 72 percent of all millennials believe that they’ll achieve their investment goals, whereas only 47 percent of them are knowledgeable about investing. This results in low financial security, high debt and a very, very uncertain future. Fortunately, mastering the art of financial planning can help one overcome all of these obstacles and here are five simple tips to help one do so.
Start an emergency fund
You never know what comes next, which is why you need to find a way to provide your budget with a degree of financial insulation. The rule of the thumb is that your emergency fund needs to contain at least three months’ worth of living expenses, the more you go over this the better but don’t be too hasty to fill in the account, seeing as how your money will also be needed elsewhere. As far as the emergency fund goes, it can provide you with a necessary level of financial insulation from all sorts of problems, including the loss of employment.
Check your loans and interest rates
The next thing you need to consider are the loans that you need to cover. You see, a plethora of loans can ruin your credit score and eats away your profit through expensive interest rates. The easiest way to handle this is to look for a favourable consolidation loan. This way, you’ll get a chance to replace all your minor loans with a single major one and get to deal with a single monthly payment instead of having to juggle between several of them simultaneously. If this is not a possibility, you need to start paying your loans off. During this period, it would also be wise to prioritize high-interest loans and pay them off first.
Start making more money
In this day and age, making some additional income is easier than it ever was in the past. By finding freelance work online, it will be a lot easier for you to start making more money and with bigger income, it will be a lot easier for you to both pay off your loans and fill your emergency fund. This kind of work is particularly handy for those who already have steady employment since it can help one customize their work hours. This surplus of income can also be used for various investments, which is an issue that we’ll discuss later on. Also, keep in mind that how much money you’re making doesn’t really matter unless you can learn how to control your spending habits.
Finally, once you have a surplus, what you need to consider is using this money in order to create a source of passive revenue. This is exactly what you’ll get through investing, yet, there are more than several things you need to learn about this concept if you’re to stand any chances. First of all, you need to develop an investment strategy. Second, you need to learn how to properly diversify your investment portfolio. Third, you need to learn a thing or two about risk management and decide whether you’ll be an aggressive, a moderate or a conservative investor. Lastly, you need to learn never to put on the line more money than you’re willing to lose.
By understanding these five simple steps, you’ll ensure that you have a much more reliable financial future ahead of you. Due to the fact that your finances are something that you have to tackle every single day, the better you get at it, the better the lifestyle you’ll be able to afford. While money can’t buy you happiness, it’s always worse to be unhappy and in financial dire straits.