When meeting to discuss a financial plan, it is important to have dreams and goals outlined. However, dreams can take much longer to achieve without completing some basic steps first.
1) It is important to pay down debt! Start with high interest loans or credit card bills and then work your way backward to the lowest interest amounts. This should save you a lot of money otherwise paid in interest while simultaneously reducing your total debt and increasing your credit score!
2) Consider refinancing major loans like car, student, and home loans while interest rates are low. Refinancing these loans can result in hundreds of dollars a month less being paid to your lender, and this can increase your monthly cash flow. Also consider putting any excess money toward principle payments to speed up paying off the loan and reduce the amount in interest paid. This can result in you being debt free much faster than initially thought and reaching your goals faster as well!
3) Create an emergency savings account and make sure to put at least 3-6 months worth of income into it. This amount can vary depending on personal preference or familial responsibilities, but the more you can save the better! You never can predict a sudden layoff, medical emergency, natural disaster, or car/appliance repair, but this will give you time to make necessary adjustments. This independence and ability to get back on your feet is critical for your long term success and mental health.
4) You should save up to meet current or future medical needs. This can be part of your emergency savings, but it is probably a better idea to sign up for better health insurance plans and start saving in a Flexible Spending Account or Health Savings Account. Each have certain requirements, benefits/drawbacks, and tax implications, so please speak with me or your HR representative at work to learn more.
Completing this checklist might seem daunting, but it is actually fairly easy with discipline and a little time. These steps will prepare you for the next phases of financial independence consisting of investing, retirement planning, estate planning, small business planning, and college/family planning. Don’t feel overwhelmed because Daus Consulting is here to help you!
*This article is original content produced by Daus Consulting LLC and may not be used in any other capacity without the express written consent and source credit given. The contents of this article are for entertainment and learning purposes; however, it does not constitute financial advice. Financial advice differs between individuals and business, and a consultation can be obtained at out website https://dausconsulting.com/shop/!