Throughout our lifetime, we are bound to make various choices that will affect our future in both small and huge ways. Every choice, no matter how small will alter the course of our lifestyle. Since our finances are a major factors in giving us a comfortable way of living, you need to identify the different financial decisions that you have to make.
One of our major goals in life is to grow our personal wealth so we are able to provide for our needs as they grow. If we fail to make the right decisions, it could cost us, not only a comfortable way of living, but also a debt free lifestyle. Debt is one of the financial mistakes that cost us a lot of money – wasted on interest and other charges involved with borrowing money. If you want to keep the fruits of your labor to yourself, make sure that all your financial decisions are made in such a way that will keep you from incurring any form of debt.
What financial steps can affect your life dramatically
But what are the financial steps in your life that can have the most effect in your future way of life? Here are different major financial decisions that you will have to make in your lifetime.
Education
Some people will not immediately think about this as a financial decision. But if you think about it, you will realize that apart from your skill or talent, you will choose a degree based on its ability to make you earn. Some high school students have yet to decide on what they want to do for the rest of their lives. These are the ones who rely on the income possibilities to choose a career path.
When considering your education, think carefully if you really want to put yourself through student debt just to get an education. While it can be considered a good debt, make sure that you get a loan that will not take you forever to pay off. If possible, work on side so any financial aid that you will get will strictly be for your tuition and school fees. Your day to day expenses can be financed by a part time job that you will get while on campus.
Paying off your dues
As soon as you finish college and you have put yourself through student debt, you may want to consider how you plan to pay it off. This is one of the financial decisions that could affect your life for the next ten years – if you chose the wrong way of doing it. Make sure you select the option that will fit your debt problems well and your payment capabilities too. Paying off debts can take a few months to 5 years. However, its negative effects can ruin your credit history for the next 10 years. Consider your financial goals for the future to help you decide on the debt relief option that you will use for your debt problems.
Getting a job
Getting a new job or even shifting career can be quite tricky. While finances is also important, do not lose sight of how it will make you happy and fulfilled. If you have both, you can be at your most productive state and that will help you earn more money. If you are looking for a higher raise, start by looking within the company that you are working for. They may be able to promote you to a higher position with better benefits. Just be honest with your employer and be careful when making that leap. Do not make rash decisions so as not to lose your main source of income.
Marriage
Although paying for a wedding will cost quite a lot of money, we are not really concerned about that. Our concern lies in the fact that you will be combining your finances with your future spouse. Make sure that you are honest with each other about your current financial standing – especially your debts. You don’t want to ruin your future together by keeping those high credit card debts a secret. Start by discussing your financial goals together. That should be a good way to begin discussing how you will merge your finances.
Major purchases
This is also one of the financial decisions that could build up your personal wealth or ruin it. These major purchases include a home and a car – or anything that will cost you a huge sum of money. If you cannot avoid borrowing money to pay for it, make sure that you have the means to pay it back and you will create a payment plan to fulfill your payment commitment.
How to make financial plans for your future
Making financial plans for your future is a good idea because it will help you prepare for any expenses that they may incur. It will also give you time to come up with different ways to keep your costs minimal.
If you have no idea how to start a financial plan, you may want to hire a certified financial planner that will help you reach your goals. A great place to start is through the NAPFA or the National Association of Personal Financial Advisors. But if you want to save on the service fees that they will charge, here are some tips on how to start planning for future financial decisions.
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Create a budget. A financial plan will always begin with budgeting. You need to know how much money you have, where it goes to and how you can shift it so you can reach your financial goals.
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Get rid of your debts. Before you are maximize your potential for financial growth, you need to get rid of the things that are pulling you down. In your finances, that will be your debts.
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Make sure you have adequate reserve funds. You need your emergency fund so that you can finance any unexpected situation. That way, you don’t have to incur more debt or sacrifice your current payments just to meet that emergency need.
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Invest your money. If you have extra to spare, you may want to consider investing your money. This is a great way to grow your income.
- Save for your future. Of course, you need to prepare for your retirement and the earlier you start, the better it will be for you.
