Make yourself a priority
When it comes to financial planning, a pivotal move is to make yourself a priority. In other words, when you receive your income, use a part of it for your savings, regardless of your other financial obligations. Contribute to your safety net before you start paying for bills and other expenses and run out of money.
Think of it as dieting. “Saving the money right from the get-go means there is no discussion or thought required. It is just done,” says Lynette Lim, Director and Co-CEO of Phillip Capital Inc. of the US operations of the PhillipCapital Group. “Once the savings have been set aside, you can then use the remaining funds to cover your monthly expenses and spend it however you like.”
Paying for your future first is the best way to increase your financial security, no matter what. It might seem difficult to put the money aside and not use it for something that seems more important at the moment, but trust me, you’ll be more than grateful for sticking to this approach in the future.
Build an emergency fund
If you make yourself a priority and put some of your money into a savings account, a portion of that money should be transferred to an emergency fund. According to financial specialists, a rainy day fund (as some call it) is an essential component of any efficient financial plan. It’s your cushion for unexpected expenses such as sickness or injury, major car repairs, and the like.
Valerie Tan, Head of Business Risk Management in a global bank, suggests being “conscious to set aside cash and not overcommit or invest in assets that cannot be easily liquidated.” Without an emergency fund, you’ll have to use your other sources, like your long-term investments. Instead, make the emergency fund out long-term investment “that will provide you with a sense of financial security to tide through difficult periods.”
See also 12 Smarter Options You Should Try Before Raiding Your Retirement Funds.
