Financial independence is a goal for many people, especially those trying to take control of their lives and make positive changes in their lives. On another page, I mentioned that the first step to financial freedom is paying off your debt. The second step is saving what you comfortably can in order to grow your wealth. On this page, I will provide more tips for saving money. Saving money is a great way to realize important goals, such as buying a house, putting your kids through college, retiring early, paying for a pardon, and more.
What Can You Save?
Once your debt is paid off, the next step towards reaching your financial goals is saving money. It is always a good idea to take stock of your income and your expenses each month. Use an excel spreadsheet, google doc, pen and paper, or app such as Mint to determine this data. Once you understand what you make and spend each month, you can determine what you can afford to save.
Many suggest a 50/30/20 budget. In this scenario, 50% of your income goes to necessities, such as housing costs, utilities, groceries, etc. 30% goes towards things that you want to buy or do, such as vacations, gifts for others or yourself, eating out, etc. Finally, 20% of your income goes to savings.
Let’s talk more about where your savings should go.
There are many options for putting money away. First of all, consider opening a basic checking and savings account. If you have direct deposit paychecks, you could set up for a certain percentage to automatically go into your savings account. This is money that you should not touch in day to day life – that is what your checking account is for.
Another fund that you can set up is a rainy day fund. This fund can be used in case of unexpected emergencies, such as a medical emergency, property damage, etc. These events aren’t necessarily on your radar, but they could happen, and it is a good idea to plan for a fund that can take care of these issues.
You can also consider your retirement fund. If your employer offers a 401(k), make sure to take advantage of that. A portion of your paycheck can go towards this account automatically. While this will reduce your take-home pay, it will also mean that you are preparing long-term. If your employer offers a matching 401(k), make sure that you are contributing enough to take advantage of this match. If you can’t get retirement benefits through your employer, you can set up a retirement plan through something like a Roth IRA. There are plenty of retirement options available, whether your employer will assist you or not. Look into this and find the right fit for you.
What are You Saving For?
Having a cushion of money stashed away for your future can reduce anxiety and help you reach your financial goals. While sticking to a budget and saving money is not always easy, it is worth it in the long run. Set your goals and start small so that you can build towards them. If you are trying to reach a goal that will improve your life, such as continuing your education, applying for a Connecticut pardon, or starting your own business, we can help. Financially security can also look great on a pardon application. Check out the other pages on our website for additional resources.