Your current financial situation may feel secure, but you may have wondered about how to make your financial future good in the long term. The idea of investing your money or purchasing insurance can seem daunting, and fortunately, there are many other solutions for creating a secure, stable financial future that don’t necessarily involve large economic decisions.
[Read: 3 Solid Ways to Ensure Your Financial Security]
If you’re motivated and ready to make your financial future good — actually, great — in the long-term, here are several steps you can take to ensure a stable and secure financial future.
Envision Your Future
A simple method to make your financial future good in the long term, envisioning your future helps you to create a concrete economic plan. If you know what your ideal retirement looks like, or whether you want an early retirement, you can save according to these outlines. Knowing what you want and when you want it guides you in your savings. Once you figure out how much you need to save to reach that goal, you’ll inevitably realize how often you’ll need to save. With habitual, frugal saving, you can easily reach your goal in the designated time, and ultimately prepare yourself for a financially secure future.
Decrease the Ratio of Expenses to Income
If you’re spending more than you’re making, or just breaking even, you’re not adequately saving for the future. Capping your spending at a certain point each month can drastically change the balance of your savings account. Taking into consideration your monthly income, bills, and other necessary expenses, you can then find a number you’re comfortable with spending every month. This may require a few daily or monthly sacrifices, but it’s all in the name of trying to make your financial future good from retirement and beyond. If you’re still stuck on how to adequately decrease your spending, there are plenty of how-to guides that explain how to decrease your expenses without compromising your lifestyle in a dramatic way.
Create a System of Saving, Automatically
You may be having difficulty allocating a portion of each paycheck to your savings account. Sometimes the temptation to shop or go out on the town is too great. If that’s the case, setting up a direct deposit from your paycheck into your savings account can help you to make your financial future good on a long-term basis. If you don’t receive your pay checks through direct deposit, you can set up a date with your bank to transfer a portion of the funds in your checking account to your savings each month. This system treats your savings as an ordinary bill or mortgage payment: a necessary expense that you aren’t able to touch or spend. Out of sight, out of mind, right?
Review Your Accounts Each Day
To get a concrete idea of your spending habits and your total income, check in with your banking or budgeting app every day. You’ll be able to see your income, your spending, and your balance, as well as purchases that might have been ill conceived. Paying close attention to your financial details on a daily basis can allow you to keep track of your budget and keep you on top of any impending issues before they became a problem. To make your financial future good, you need to be vigilant; leaving your budgeting up to someone else or allowing it to evolve on its own won’t have the same benefits as being an integral part of your budgeting process.
Downgrade What You Can
Keeping up with the Joneses can be extremely tempting, but in the long-term, it actually has an inverse affect on the stable, secure future you actually desire. Downgrading your house, your car, or miscellaneous items you own can lead to an increase in your monthly buffer. Choosing a car that may not be the fanciest, but which ensures good gas mileage and inexpensive maintenance fees will allow you to have an extra bit of cash to add to your savings account each month. To make your financial future good in the long-term, you must be willing to sacrifice certain elements of your life that are too lavish for your income. Once you get in tune with a modest lifestyle, you’ll find that purchases you intend to buy become less and less lavish, as your frugality becomes a habit and your priorities sharpen.
That’s not to say you have to downgrade your life — establishing priorities and knowing what you want in the present and in the future can enable you to make wise financial decisions. If you really love your platinum gym membership, for example, you can:
- Find a way to downgrade another facet of your lifestyle
- Keep your gym membership but downgrade to a basic account
- Seek out another gym that offers the same features of the platinum membership but for less
[Read: Is a Debt Management Plan Best for You?]
There are plenty of ways you can downgrade elements of your lifestyle without sacrificing things you truly care about — and while still keeping in tune with your monthly budget to make your financial future good (if not great) in the long term.