Perhaps the most important thing to remember is to consider your savings, not what is left after you pay your bills each month. It is how much you actively decide to put aside each month to build your financial future. In other words, it is a decision you make, not one that is based on your income and existing expenses. This results in all kinds of positive effects, including reduced personal stress about money, a sense of direction in knowing that you are on the road to financial peace, and automatic savings or investments that will enable financial freedom.
Embrace Your Budget. If you have decided how much you want to invest each month, the rest of the line items on your monthly budget must follow this lead. Find a good budgeting app (there are many) and use it. But fill in how much you want to save first!
Be More Realistic and Less Impulsive. If you can’t afford to buy a new house or car today based on your current resources (and credit score), hold off on that purchase. Achieving financial peace is a long-term goal, and the need to scratch a short-term itch by making a major purchase today could significantly delay that objective or take it off the rails completely.
Work Hard to Reduce or Eliminate Debt. Even with interest rates as low as they are today, paying off loans on past purchases (or education) is really important. If you are paying hundreds of dollars each month (even on the principal only), that money could have been growing as part of your investment portfolio. Some experts advise their clients to take on extra work, or even go on a rice and beans diet, to pay off your debt early.
Create an Emergency Fund. Anyone can get sidetracked by emergency home repairs, health issues, or changing job status. Achieving financial peace requires that life’s diversions and unforeseen issues don’t seriously interrupt your planning. Set up a separate emergency fund that can be used to pay your regular expenses for three to six months. This will enable you to continue on to your goal of financial peace, with as little disruption as possible.
At Isakov Planning Group, our financial advisers can lay out a plan to achieve financial peace and help you navigate the bumps in the road along the way.
Contact us today for a free consultation to change the way you think about understanding your money and how it can change your hopes for a financial future of freedom.