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How to plan if you are low on funds – San Bernardino Sun

If you (or someone you know) feel that you don’t have enough income or assets to need a financial plan, you’re not alone.

A 2018 Federal Reserve survey found that 25% of Americans have zero retirement savings and one-third of middle-class Americans can’t stand a $ 400 emergency. rice field. According to the US Census Bureau, 45% of Californians did not own a home in 2020.

Traditional personal financial planning begins with long-term goals. Some events, such as retirement and children’s education plans, will not happen for more than 30 years. If you are young or have limited funding, this is often an immediate turn-off. What do you think about buying expensive life insurance or saving 10% of your income (sometimes called “pay yourself first”) for retirement when you have little monthly income? ..

If you are currently dealing with economic instability and have uncertainty about your future, it is difficult to plan long-term goals.

What if I already have a derailed financial plan? People most often file for bankruptcy due to sudden and unexpected life-changing events such as illness or injury, unemployment, death or loss of spouse due to divorce. In all the suffering we see around us, why spend all our time and effort now and now sacrifice for promises in the distant future that may not happen?

The traditional financial planning process was developed for another generation in the last century. Most young people are unlikely to have the same wealth as their parents and grandparents. It’s not your imagination that life is more expensive. Real wage declines, inflation, and “shrinkflation” are real when you receive fewer services and smaller products at the same price. The baby-boomer generation was much easier to graduate from college, buy (and repay) a home, and retire in their early 60s without debt than young people today.

But instead of completely destroying the outdated financial plan, we’re doing the best part of it to help improve your financial position (or someone you know) from now on. What if you take it? Set aside the first step in setting long-term goals and instead understand and use the best (almost free) financial planning tools available today.

Reaction vs. determination

First, understand that even if you don’t have a financial plan, you are still making financial decisions that will affect your future every day. The decisions you made to spend, save, charge, sign, etc. were either planned or passively responsive, because it was convenient.

When you negotiate salaries and benefits for a new job, rent a car or apartment, open a bank account, or decide how much to pay with this month’s credit card, you join our economy Was, and those actions affected your finances in the future. When it comes to finances, most people don’t research and consider options, confirm contracts, ask questions, or negotiate before signing. This is also part of the plan.

For example, in the book Women Don’t Ask, author Linda Babcock writes that 93% of women (and 43% of men) did not negotiate their initial salary. Still, those who negotiated were able to increase their wages by more than 7%. It may not sound like much, but if you add $ 350 a month and invest in your tax deferral account with an annual return of 8% for 30 years, it’s over $ 500,000.

Some industries make it a “bank” that you are just doing the simplest thing and not an informed and attentive consumer. For example, according to Bankrate, banks paid $ 30 billion in overdraft fees last year, other interest rates were flat, but credit card interest rates will rise again in 2021. Most consumers choose banks based on the convenience of their location, not on services or fees.

There are companies everywhere that are ready to take whatever you have. Credit card companies want you to respond to their special offers with a quick referral fee. Private “diploma factories” are willing to sign up for student loans without guaranteeing future employment or salary increases. The car company wants to put you in a leased vehicle with a low down payment (but a high excess mileage fee). It can be used for the delivery work done to pay for the car.

There is an app for that

To make better financial decisions, you need help investigating your options, knowing what questions to ask, and getting used to the negotiations. Support for doing all this is almost free and electronically available.

So set aside time to investigate and make changes.

First, you need to ensure that you receive everything available while your income is limited. Currently, there are many benefits that can be used to support rent, utilities, higher education, meals, dependent care, and healthcare costs. Prioritize investigating your living expenses to see if any assistance is available in each category. There is a list of federal programs and links to state programs. acf.hhs.gov/ocs/programs..

There is an article on how to negotiate the best salary and allowance without fear. Harvard Business Review on hbr.org and learnhowtobecome.org is two of many sites that offer career support. If you’re thinking of adding a second job, you can often spend your time adding skills and investing in yourself for free or at a lower cost. Make sure employers such as Apple, Netflix, Google and Tesla no longer require a four-year degree. Investigate the jobs you want, the skills you need, and how to get those skills for free or at a low cost. Study where you want to live and how much you need to earn to live there.

Many sites are a great source of general financial knowledge and a comparison of banks, credit cards, investment products and services. Tip: Some sites include “wallet” in their name. There are some great apps that track your costs and make recommendations for you. Thebalance.com has several app reviews. The tools are there and most of them are free.

It is often said that John Steinbeck said that poor people see themselves as temporary embarrassing millionaires rather than exploited proletariats. Choose it if it helps you to think of your situation as temporary. Most of my wealthy clients weren’t rich at first. Everyone has to start somewhere. Pay attention to your finances and promise to be actively involved from this day. Investigate, ponder, negotiate and make decisions.

Michelle Harting is a Certified Accountant, Certified Business Evaluation Specialist, and Certified Real Estate Planner. She frequently talks with a group of experts about tax planning and charitable donation planning. Her offices are in Los Angeles, Orange, and Riverside County.

How to plan if you are low on funds – San Bernardino Sun Source link How to plan if you are low on funds – San Bernardino Sun

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