Do you ever wonder how your financial security ranks compared to the rest of working people your age? For example, do you know whether you’re saving more or less than average, taking too many risks with your investments, or spending too much on leisure activities like eating out and entertainment? Those kinds of doubts are quite common and are actually a sign that you have a healthy concern for your financial situation.
The key is knowing what questions to ask yourself and figuring out a way to find the answers. Consider the following avenues of inquiry for determining whether your financial situation is what it should be.
Do You Have Too Much Credit Card Debt?
Look at your statements for the past year and see how much you’ve spent on interest. If you keep balances low or pay off the entire card each month, perhaps you’re in good shape. Unfortunately, this category is a troublesome one for many consumers, who rely on plastic to get them through tough spots and then carry high balances for months or years at a time. If you have a bad feeling about the amount of interest you regularly pay on cards, consider getting rid of excess plastic and paying balances as low as possible.
Are Your Investments Too Risky?
If you have a brokerage account and actively trade, examine your habits. Do you perform research before making buys? Do you have rules about how much money to spend on purchases? Have you suffered significant losses in the past months or years? Spend a few hours delving into your account history until you have a feeling about how to proceed. Maybe you want to employ better money management, allot less money to your trading account, or switch to a less risky strategy, like using options to offset potential losses on stocks.
One of the benefits of options trading is potentially large returns. Another is that you can limit portfolio risk by purchasing options as a hedge against downturns in stock prices. Additionally, people use options as stand-alone investments because the up-front costs are often much lower than buying the securities themselves.
Do You Have A Personal Financial Plan?
Working adults tend to either have a solid, written financial plan or just drift along from year to year, and trying to save 10 percent of your income is not necessarily a financial plan. Real goals involve specific targets for saving, based on time periods and life needs, like purchasing a home or setting aside a fixed amount for retirement. If you feel as though your plan needs an enthusiasm transfusion, consider booking a short consultation with a professional planner and putting all your goals in writing.
Do You Follow A Monthly Budget?
The core element of personal financial stability is a monthly budget. It’s important to know where your money goes, where it comes from, and how those numbers change from month to month as your lifestyle changes. Take a couple of hours to look at your budget. If you don’t have one, take several hours, and make one. Don’t worry about being specific. As long as you get all your major bills and income sources into the spreadsheet, you’re moving in the right direction.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.