Financial planning can seem like an overwhelming topic if you haven't considered it in the past. It doesn't have to be that way, however. You can start taking some simple, practical steps today that will help your long-term financial future and give you some valuable peace of mind. Let's look at how to start planning for a financial future that's as prosperous as possible.
Tapping into retirement options
One of the most important financial planning goals is saving for retirement. Few people want to work forever, so a strategy for giving yourself easily accessible, reliable funds as you enter retirement is vital. The 401(k) plan is the most popular option for retirement savings, Investopedia pointed out, and it's not difficult to see why. A 401(k) plan is a flexible tool that allows you to commit as much, up to a limit of $19,000 per year, or as little of your paycheck to it as you want.
You control this retirement investment - you can choose to make it your only savings vehicle, or not participate at all and find a private savings tool. The money invested in a regular 401(k) isn't taxed until it's withdrawn, so you can invest more upfront. A Roth 401(k) allows you to invest after-tax funds, meaning less money up front but no money taken out for taxes once you reach the age of 59 and 1/2 years old. Companies sometimes, but don't have to, match contributions made by employees, whether in part or in full.
Starting to contribute to your 401(k) (or setting up an Individual Retirement Account, explained here by Nerd Wallet) is a relatively simple process. You might be able to do so through a self-service human resource management tool at some businesses. At others, you'll need to reach out to a person in the payroll or HR department, but it's often as simple as deciding how much income you want to contribute and choosing from a group of specific investments. Index funds are among the most reliable choices in terms of reasonable, consistent growth, but there will likely be others you should investigate as well.
Making a short-term savings plan
Relying on credit cards for big purchases has plenty of advantages, like earning rewards points and giving yourself an additional billing cycle before you have to pay with your own money. To avoid high interest rates, one of the main drawbacks of credit cards, you should start planning purchases in advance when possible and setting aside money accordingly. When you have the money to pay off your credit cards in full each month, you get all the benefits while avoiding unnecessary additional spending. And, when you have an unpredictable emergency where you have to use your card, you won't be carrying as large of a balance, nor have to pay as much in interest until you can get it back down to zero.
Find great interest rates and other perks for your bank accounts
Almost everyone has basic savings and checking accounts. But not all of these options offer the same benefits or level of service from the financial institution behind them. You want to be sure that your money will work for you when possible, offering interest that can help offset the slow but never-ending creep of inflation.
TAB Bank offers checking and savings accounts that can help you save, spend and earn interest effectively. Consider our High-Yield Savings option, which features a notably high interest rate along with no minimum deposit to open - and no monthly service fees - as well as a required daily balance of just $1. To find out more about our effective checking and savings choices and other accounts we offer, get in touch with us today!
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