Don’t you just love when past you did something sweet for present you? Same. Whether it be taking care of the dishes or booking a massage, thinking about things ahead of time makes life so much better.
Planning for your financial future will make things for future you much simpler. You can take plenty of actions today that will do you plenty of good in just a couple of months or years. The best part? They’re not that difficult to get a head start on.
With just a few simple ideas put on your radar, you can set future you up for financial success. Here are five simple ways to set up your financial future.
#1 Focus on Your Credit Score
Your credit score plays a major role in shaping your financial future. From student loans to purchasing a home and even into retirement, you and your credit score are in it for the long haul.
Even when you don’t have savings or your yearly income isn’t where you want it to be, you can always work on building your credit score. An excellent credit score can help you make tremendous accomplishments. If you attend college, your credit score could improve your student loan terms. Buying a house? Your credit score can help you land your dream one.
Because an excellent credit score grants you access to the best loan terms, you don’t need to depend as much on your savings, salary, or guarantors. When your credit score is spotless, financial decisions become less stressful, and life becomes more manageable.
It’s easy to work on your credit score, especially when you go about it safely. Instead of using a credit card or loan to build credit, consider using a debit card. A credit-building debit card lets you avoid the dangers of credit card debt and escape the toll of interest.
As you continue in your financial journey, prioritize your credit score; it’s an easy way to look out for your future self.
#2 Build an Emergency Fund
Hopefully, you don’t ever need to use the money in your emergency fund, but it’ll come in handy when you need it most.
If you’re hit with a massive bill that you weren’t expecting, your emergency fund will cover the cost and keep you afloat. When you don’t have an emergency fund, a crisis situation can dip into the finances you already delegated towards your needs, like paying your bills, buying food, or making student loan debt payments.
You might think you’ll never need an emergency fund, but it’s better to have one than not to. What if the bike you use to get to work gets stolen, or your cat gets sick and has multiple visits to the vet? You’ll be really glad that you’ve been building an emergency fund.
#3 Build a Savings
In addition to putting away money for emergencies, your should put away money for big life purchases. You have your constant, everyday purchases, and then you have those rare ones that make you ask yourself who am I?
Having a savings and specifying what it’s for will ensure that your big, irregular purchases don’t disrupt the consistent purchases you’ve accounted for in your budget. Establishing what you can spend the money in your savings account is key, and sometimes having multiple savings accounts is better.
You should consider having one saving account for long-term financial goals like buying a house, retiring, or paying for college. At the same time, another is for short-term financial goals like vacationing, new tattoos and redecorating.
Savings accounts are fantastic because they earn interest. This means that your money is earning money while you’re not using it. When you keep your money in a savings account with a bank, that bank will use that money to make their own investments. To thank you for saving your money with them, they pay you interest.
Your financial future requires financial planning. Often, the purchases that make us most proud are the ones that require patience. By giving the money from every paycheck a purpose, whether coffee down the block or coffee in Thailand, you’ll ultimately reach your financial goals.
Having pockets of money to pull from will enable you to accomplish all that you want to while remaining financially stable throughout every up and down. Don’t let a lack of planning keep you from doing all that you’re meant to.
#4 Create Vision Boards
Creating a vision board is the easiest way to know what to save for and what financial decisions you need to make. It might feel cheesy initially, but vision boards are incredibly helpful; they let you see your goals in real-time.
Vision boards are where you layout images that represent how you want your life to look. Although a vision board doesn’t bring your plans to fruition, it’s inspiring, motivating, and acts as a road map to your future.
When crafting your vision board, refer to financial goal examples and imagine what kind of life you truly want to live – no restrictions. If it will make you happy, bring you peace, and help you feel fulfilled, grab an image of it or a representative quote and put it on your board.
Regularly referring back to your vision board will keep you on track and solidify the idea that your dreams will become a reality.
#5 Learn as Much as You Can
The more you know about personal finance, the better off you will be. Having a basic understanding of the importance of your credit score, how investing works, and how a retirement plan is made will elevate your future financial position.
There are plenty of resources available to you that share loads of information pertaining to your short and long-term goals. The Extra blog has compiled tons of information on all things credit, and podcasts like Frugal Friends and Broke Millennial Finance are great resources for information on financial stability. Not every resource makes finance complicated and stuffy; sometimes, navigating your finances can be fun.
You can also turn to your friends, family, and mentors for more guidance. The people closest to you might have some wisdom from their experiences in your exact financial situation.
Move Into Your Financial Future With Confidence
It’s hard to feel fully equipped for the future, especially when it comes to your finances. Uncertainty is stressful, but we all must learn to overcome it.
You can move forward feeling more confident when you know you have some safety nets set up for yourself. An excellent credit score, a sufficient emergency fund, and a hearty savings will help you feel more prepared for whatever the future has in store.
Easily set up your financial future by making smart decisions today. Build your credit, your savings, and your financial knowledge.