The more passive income you earn, the less dependent you are on your full-time job. Anyone can reach financial independence and retire early if they don’t mind funneling more of their income into investments that generate passive income on their own. Your retirement strategy informs how much you should put toward tax-sheltered retirements, such as a 401(k) or Roth IRA, which in turn helps you save money on taxes.Īnd you don’t need to wait until your 60s to retire. Based on when you want to retire and what you want to spend in retirement, you can plan your own retirement strategy. Take some time to set a target retirement date. Not everyone wants to buy a home or help pay for their kids’ college, but we all need to plan for the day when we can no longer work (or are just ready to retire). That makes it easy to dismiss as a problem for another day.īut retirement is the one universal financial goal we all share. The perceived distance of retirement blurs our vision of it. Set a Target Retirement Date - & Make Tangible Progress With the security of an emergency fund, you can invest money with less fear. Whatever your personal target for an emergency fund, resolve to meet it this year. But you can also get creative by building several layers of protection, including some money held in stable short-term investments and leaving a credit card or two completely untapped for emergency use. Most people keep their emergency fund in a bank account, such as a high-interest savings account from CIT Bank. During less predictable times, I’ve opted for six months’ living expenses in cash, in line with Dave Ramsey’s “Baby Steps” recommendation of three to six months’ expenses. At times in my life when I had a stable, entirely reliable paycheck and low living expenses, I’ve felt secure with as little as one month’s living expenses in an emergency fund. People with extremely stable incomes and expenses don’t need as much cash set aside in an emergency fund as those with irregular income or expenses. There’s no one-size-fits-all emergency fund amount - not in dollars, and not even in months of expenses. The next time you need a secured loan, such as a mortgage to buy your next home, your lower debt ratio and higher credit score could help you score a lower interest rate and down payment. With each debt you pay off, you have more money to put toward the next smallest debt until you no longer owe a single monthly payment for unsecured debts.īeyond saving you money, it also helps improve your credit score. Try the debt snowball method to pick off your credit card debt and other unsecured debts one by one, pumping all your extra money into your smallest debt while making only the minimum payment on your other debts. Resolve to become debt-free once and for all in the coming year. Worse, they often arise out of wants (such as consumer credit card spending) rather than needs (such as a roof over your head). Unlike secured debts such as home mortgages and auto loans, unsecured debts tend to charge high interest rates, as the lender holds no collateral. When it comes to debt, prioritize paying off unsecured versus secured debt first. Some even help you get healthier in the process, knocking off several birds with the same stone. Try the following financial resolutions to boost your finances. New Year’s Resolutions That Will Save (or Make) You Money But as you reflect on your life over the last year and how you want to improve your personal finances over the next, focus on ideas that help you save money, build wealth faster, live healthier, and design your perfect life. Everyone wants the results - whether better health, more wealth, or closer relationships - but they don’t always choose the best ways to obtain them, leading to failure (and a pricey gym membership they didn’t use). 1, the crowds drop back down to normal levels. The first three weeks every January, I watch as the gym overflows with resolutioners.
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