The decisions you make today regarding your personal finance and investments can determine your financial situation in a few years’ time. How can you make sure that your future will be stable and secure? Here are some key tips for your life-defining financial decisions.
Pursue a job with good benefits and make the most of them. Make sure you understand the tax benefits, the retirement benefits and the health insurance options if there are any. If you are in a relationship or are getting married, keep actively involved in the financial decisions. Also, understand the financial consequences of divorce and carefully protect your interests if you should leave a marriage. And most importantly, save! Save as much as you can, as early as you can.
- Pay off your debt
Making smart decisions about debt can be more important than making smart investing decisions. Avoid accumulating credit-card debt and keep your credit record in the best possible shape to qualify for the lowest interest rates on your car and home loans.
Debt is one area where diversification is not your friend. Consolidating your debt on the lowest interest rate would be the best decision. If that is impossible, start by paying off the debt with the highest interest rate and work your way down to your debt with the lowest interest rate.
- Buy property
Buying a home is a decision that should not be taken lightly. In fact, a poor decision with regard to a home purchase can drastically alter your financial future. It might be best to wait with buying your first home until you are in your 30s. That way you can first build up savings and you are sure about where you want to live permanently. When you purchase a home before you’ve built other savings, your total financial asset portfolio is highly undiversified. And you don’t necessarily want to tie yourself to your current community. This can limit your future job opportunities to your current city.
Insurance is a key aspect of financial security. The type of insurance you need depends on your particular circumstances. The best insurance lesson is to insure against catastrophic losses, regardless of the probability. It is important to be prepared when it comes to your car, home and home contents insurance.
- Understand risk
One of the major impacts on your life is how you deal with risk. Would you rather work for a tried and proven company with a strong benefits package, a smaller start-up with great opportunities to buy stocks in the company or start your own business? The potential payoffs escalate as you take on more risk, but so do the possibilities for disaster. The same is true for investments. Make sure your risks are age-appropriate. If you’re young, you can dust yourself off and start again. For people over 40, the ability to absorb losses diminishes as retirement nears or as responsibilities grow.
When making financial decisions, don’t be afraid to ask for guidance. Speak to an advisor today to get sound advice on your personal insurance. Make sure your future is secure by acting today.
Source: Indwe Risk Management