How To Set Effective Financial Priorities
Prioritising Your Financial Goals
When you have a variety of debt, monthly bills, and savings goals to work towards, it can be difficult to decide which need is greatest and should be prioritised. With the right strategy, you can make sure you are getting the most out of your money and achieving your financial goals in the most efficient way possible.
Whatever your financial situation, it is important to ensure that you have an emergency fund that you can easily access if necessary. A good emergency fund should have three to six months of necessary living costs and should only be taken out for actual emergencies, like when you lose your job, or your car breaks down.
Paying Off Debt
Once you have emergency funds in place, you can begin paying off any debt you’ve accumulated. When choosing which debt to pay off first, always start with the debt with the highest interest rate. High-interest rate loans cost you the most money each month, so paying them off early saves you more in the long run.
You can begin by paying off all debt with an interest rate higher than 7% since this is the average market growth rate for investments. Once debt with interest rates above 7% is paid off, you can begin investing while paying off lower interest rate debt.
Retirement Savings & 401(k)
Investing is a great way to save for retirement. When you begin investing, you should aim to invest in a diversified portfolio that allows your money to grow with the market for the most secure long-term growth.
If your company offers a 401(k) plan, you should invest money into this retirement plan first before investing in other options. This is because your employer will match your investment up to a certain amount, automatically doubling your money.
Get Finances Organized
Having a great financial plan allows you to feel confident in your ability to pay off your debts and establish financial stability. Take a look at your finances today to plan an efficient and secure future.