Preparing for Your Future: Why Saving Money is Essential
You graduated from college and now, in your early thirties, have a successful home-based business. It’s a wonderful life. However, with any business, you will have highs and lows. This is where saving money and careful financial planning is critical to your continued success.
Funding Your Business
Without savings in reserves, when you experience a month or two without growth, you can end up in financial ruin quickly. Unfortunately, banks are not interested in providing loans to businesses without assets. When you have a home-based business, you have to find other ways to acquire money. You can borrow from a family member and pay them back. However, if that’s not an option, you will need to find another lender. Thankfully, there are other types of lenders with less stringent requirements. Short-term loans, such as payday loans, are available to most U.S. citizens, who have direct deposits and an active checking account. In some cases, you can even use a payday advance app to acquire funds ahead of your next deposit.
When you own your own business, it’s up to you to start a retirement fund. Counting on social security in your retirement is not going to provide you with the same quality of life. The good news is that you can open a savings account with as little as $25.00. Once you build sizable savings, you can take a portion of the money and open a retirement account. A traditional Roth IRA, 401K and a high-interest savings account are all viable options.
Spending Money Wisely
For the self-employed, the next paycheck is never a guarantee. This is why it’s important to learn how to budget your money and spend it wisely. If there’s something you want, save up for it. Following a budget will prevent you from falling behind on your monthly bills and allow you to maintain a good credit score. Make it a practice to shop around for the lowest price on anything from food to a new car.
Debt is something that most people have. However, excessive debt can cause you to make frequent late payments and even miss payments on important bills. As a result, you’ll have a lower credit score and pay late fees. Getting your debt under control will help you to avoid this scenario. If you have more than a couple of credit cards, apply for a credit card that lets you transfer balances from other cards. This lets you consolidate your credit card debt into one lower monthly payment. In many cases, these companies also have an introductory interest-free period of up to a year.
Pay Yourself First
Many people who enjoy financial success pay themselves first. They, in essence, have a weekly or biweekly allowance. This money is what you use for the things you want, the extras. However, once you use up the money, you have to wait until the next pay period to receive more. It’s an effective method that prevents you from spending your bill money. At first, it may be difficult, but once you get a few weeks in, it becomes a good habit.
Cutting Back on Household Expenses
If you find that you have very little money left at the end of each month, there are many ways to reduce your overhead. If you have a mortgage, and it’s in good standing, refinance the loan. With interest rates at an all-time low, there’s no better time than the present. Luxury expenses such as your cell phone and cable service are other bills that you can reduce. Contact the carrier to see what you can do to lower it.
Regardless of your age, managing your money responsibly is important to achieving a bright financial future.