3 ways to take control of your finances again

Author: Benjamin Lee

Many of us would agree that life’s too short to keep working forever. However, retirement may be a pipedream for many Americans. From a study conducted by Forbes in 2019, it was determined that the average American simply does not have enough saved away for retirement.

While some may argue that social security and welfare would be able to see them through retirement, it’s simply not possible. With reduced savings and longer lifespans, it would appear that many most of us simply cannot afford to retire.

However, there’s still hope on the horizon. With some savvy investments and a prudent approach to financial management, we’d still be able to enjoy our retirement years. Get inspired with this article and learn how you can take charge of your financial standing.

1. Start saving

Before you do anything else, get started by setting aside a portion of your monthly income every month. Unsure how much you should be putting away? Start by deducting 10% of your salary each month and depositing it into a savings account.

At the start of each month, set aside 10% on its own before using your salary for anything else. All too often, folks only save what they have leftafter using up most of their salary. Consequently, this makes it nearly impossible for them to put aside any amount of money. Putting aside money for your savings first, forces you to control your expenditures and exercise more self-control.

To discipline yourself, you can start with a forced savings scheme. A forced savings scheme automatically deducts a portion of your salary every month and deposits a portion of it into a savings account. The funds saved in this account should be left alone or deposited into a fixed deposit in order to earn interest.

Some banks even offer high-yield savings accounts which offer above market rate interest on savings. Maintaining a forced savings scheme throughout the years helps you build up a sizeable nest egg for in your later years. 

2. Get your credit card debt under control

At their best, credit cards can be a real lifesaver. At their worst, credit cards have the potential to sink you with debt. In fact, credit card debt is an extremely serious problem all over the world. According to research, it was determined that credit card debt in America is currently at an all-time high at $870 billion. 

The study also revealed that a shocking 50% of Americans have maxed out their credit limits. With the extortionate rates charged by banks, it should come as no surprise that many of us are unable to service our credit card debts.

Most of the time, folks often pay the minimum amount on their credit card debt. By doing so, they’re only making payments on the interest charged to them. The original principal sum is in no way reduced. As you can see, the only ones who stand to gain from this are the banks.

Thus, in order to take control of your financial situation, it’s crucial that you get your credit card debt under control. Instead of charging everything on your credit card, switch to a debit card. Debit cards allow you to go cashless while still remaining debt free. Along with this, chances are you’re much less likely to splurge on expensive purchases with a debit card.

3. Develop alternative income streams

In today’s economy and job market, it’s simply infeasible to rely on a single stream of income. Fine, maybe you and your partner both have high-paying jobs and are relatively comfortable. But, have you considered the fact that either of you can still fall sick or lose your jobs?

Rather than having all of your eggs in a single basket, spread out the risk by building up alternative or passive income streams. In recent years the term passive income has been used over and over by motivational speakers or “genius investors” looking to sell you their methods. Despite the various misconceptions, developing a passive income stream is crucial in order to remain financially sound.

Forget the get-rich-quick schemes and MLM tricks, stick with the fundamentals. Build up your investment portfolio by buying a variety of stocks and bonds. Utilize excess cash from your forced savings scheme and park your cash into a fixed deposit.

Maybe you have some free time available, so why not take up freelancing work. From copywriters to designers and even consultants, the gig-based economy allows you to supplement your income. If you’re particularly good, you can even consider starting your own business from your freelance experience.

If you like sports, consider betting on horse racing or check the NFL Super Bowl odds. But remember do it as a hobby and don’t bet too much, since you can risk losing more that what you are gambling. Inform yourself about it and wage responsibly. 

With some self-discipline and these tips, you’ll be able to build up a solid nest egg for your retirement years. For more information follow me on Darwinsmoney.com.