There are certain things in life you want to consistently re-evaluate. Your hairstyle. Your taste in decor. And, of course, your finances. From your savings strategy to your investment portfolio and retirement planning, it should all be up for review. Going through your financial situation with a fine-tooth comb today can help ensure you’re prepared for a better tomorrow.
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The good news is that the process doesn’t have to be painful. Identifying pain points now means you can fix them before they escalate. Think of it this way: The sooner you start and the harder you work, the more likely you’ll be to achieve your financial goals.
Having good — or better, great — credit opens doors to everything from car loans to the rates you’d pay on a mortgage. Simply put, your credit score can impact major parts of your life, including where you can live. Regardless of which stage of life or financial journey you’re in, having good credit means having more choices.
So, how do you bring your credit score up? First, carefully examine your credit report to ensure there are no errors. Next, focus on paying down high-interest debt while keeping your credit card balances low. Working with a financial advisor or credit counselor can also help you develop a personalized plan to improve your credit.
No matter which pop culture financial expert you’ve turned to for advice, they’ll tell you one thing: You’ve got to have a robust emergency fund. Remember the saying about the best-laid plans of mice and men? They all too often go awry. Losing your job, dealing with a car breakdown, facing an illness, or taking on any major unexpected expense can set you back financially — sometimes by years — unless you’re prepared.
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You can avoid getting caught in the sticky trap of debt if you have enough money saved to cover anywhere from six months to a year of living expenses. One of the best ways to set up an emergency fund is by using a high-yield savings account and making regular contributions to it. The interest will accrue over time, boosting your savings, and you won’t face penalties for taking the cash out when you need it.
If there’s one thing that’s indisputably a part of life — after death and taxes, that is — it’s debt. Though all debt isn’t created equal, you need to know how much you owe, from car loans to credit card balances. Giving yourself every financial advantage before you sail off into the sunset means paying down that debt.
Collaborating with a financial advisor you trust is a great way to develop a debt repayment plan and create a budget you can stick to while putting that plan into action. However, if you’re looking to get started right away, you can also explore popular debt repayment techniques, like the snowball and avalanche methods.
Taking stock of your financial well-being doesn’t only entail focusing on the here and now — it also means planning for the future. Ask yourself whether your life insurance would truly cover your loved ones if something were to happen to you, or if your estate plan is up-to-date. If the answer to either of those questions is no, then it’s time to sit down with a qualified professional to update your plans and policies.
Investing can be one of the easiest ways to build wealth, but it can seem intimidating from the outside. Many people don’t regularly check or update their portfolios — or even start investing in the first place — because of anxiety about making poor choices or being taken advantage of.
Not everyone in the field is a “Wolf of Wall Street.” Finding an advisor who can help you choose investments that align with your financial goals and personal values can empower you to make bold choices with potentially big rewards for your future.
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
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This article originally appeared on GOBankingRates.com: Reevaluating Your Financial Situation: 5 Steps To Take Today for a Better Tomorrow
