When faced with financial challenges, it’s okay to take a step back, take a deep breath, and remind yourself, “I’ve got this.”
Having that assurance, however, means establishing a few simple and easy financial habits that can ease your mind to help you rest easy at night.
Save for Emergencies
When life gives you little twists and turns, having an emergency fund can cover or defray those unplanned expenses.
While many financial experts recommend having six months of your regular living expenses saved, the good news is that stashing away even a few hundred dollars can help when life delivers surprises. Setting small and progressive goals will reduce anxiety and help you build momentum.
Consider building an emergency fund through “out of sight, out of mind” methods; send a part of your directly deposited paycheck into a separate savings account or set up automatic transfers from your checking to your savings account on a schedule and for amounts that support your goals.
Another option is to take advantage of SAFE’s Perfect Cents Checking® that rounds up each transaction to the nearest dollar and deposits the difference into a SAFE savings account at the end of the day. It’s savings set on automatic!
With an emergency fund, avoid the temptation to tap it for non-emergency expenses. Yes, it’s your money, but remember it’s money you set aside for a rainy day.
Create Healthy Debt Habits
Credit cards offer convenience, additional levels of security, and some offer cash rewards and points good toward travel. When used responsibly, credit cards can be a useful tool for your personal finances.
But if you feel you would like to reduce your credit card debt, there are two main methods to do so: the snowball and the avalanche methods.
With the snowball method, start by paying off the card with the lowest balance. Then apply the money used to pay off the first card toward the card with the next lowest balance. You snowball your payments up to the card with the highest balance.
Using the avalanche method, pay off the card with the highest interest rate first, and then pay off your other cards based on interest rates from highest to lowest.
You can also consider consolidating credit card debt into lower-interest personal loans or home equity lines of credit (HELOCs). Products such as these can lower your overall monthly payments and help you pay down debt faster.
Save for Your Future Self
Set a plan to save for your future. Accounts such as IRAs and 401(k)s provide ways to incrementally and automatically add to your retirement savings. Holding them long-term allows for interest and dividends to grow over time.
When saving for retirement, the earlier you start, the more you can save and the more interest and dividends you can earn. But don’t worry if you didn’t start a 401(k) at your first job. Starting retirement savings at any stage of your career can support the financial wellbeing of your future self. Take advantage of employer matches and expanded catch-up contributions in your 50s. Avoid moving your money across investments often. Instead, consider a slow and steady approach.
Having a diverse mix of assets to pull from will help lower risk and support you in retirement, such as home ownership, retirement accounts, Social Security, and pensions.
Need some friendly guidance? SAFE’s wealth management services can connect you with experts who can help you find the right solutions for your long-term goals.
Take positive and healthy steps now to ensure better sleep now and for many nights to come
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