5 Tips for Putting Yourself on the Road to Financial Security

Financial security can mean having enough in the bank to cover emergencies and enough in your payroll to cover daily expenses. More importantly, this can mean being debt-free. For most Americans, this may seem like a dream.

But as we’ve previously discussed, take a look at Warren Buffet. Born in Omaha, Nebraska, young Warren would enter into stocks at 11 years old while investing in land as well. By starting out young, Warren Buffet grew to amass a fortune and become one of the world’s most successful investors, becoming an aspirational figure for those who want financial security.

This can be you. Find out our other tips for financial security below.

Start as soon as you can

Inspired by Warren Buffet, it is important to start today. This doesn’t have to mean going into stocks or land. Every penny saved helps to cover expenses. Saving $200 every month for 40 years at a 5% interest rate will allow you to save more than an individual who saves at the same rate for 10 years.

If $200 seems steep, then go lower. The important part is understanding your monthly budget and sticking to it. Consider every expense for the long run and keep the goal in mind.

Get a tax-deferred savings account

Consider your options to maximize tax saving because not all accounts are equal. A Roth IRA is easy to open for anyone who earns less than the established income limits. Instead of being funded by pre-tax, like a 401(k) or a traditional IRA would, contributions to a Roth IRA are funded with after-tax money. This allows earnings to grow tax-free once the contribution is made.

The Roth IRA automatically fosters discipline too. Early withdrawal of any investment gains will be taxed and penalized until the age 59 when the individual is expected to go into retirement.

Maximize available resources

Likewise, there are many resource options available for learning about building wealth. These include guides and tips for your specific needs as well. AskMoney.com has guides on taxes, mortgages, budgeting, and investing, which can be especially beneficial for people who are just beginning to understand how to build their wealth.

Read up on whether a supermarket membership card is worth the initial payment or how to understand a bill of sale records. The great part about resources on the internet is that they are free. Maximize what is already available to broaden your knowledge of your financial situation in order to maximize savings and minimize expenses.

Seek professional assistance

Many resources also offer free help from a financial advisor or other money professional. VITA or the federal Volunteer Income Tax Assistance program offers free tax help from IRS-certified volunteers to people who generally make $54,000 or less. Also included in the eligibility are persons with disabilities, the elderly, and limited English speaking taxpayers.

Otherwise, further pro bono providers range from the Financial Planning Association to the National Foundation for Credit Counseling. Take initial stock of your current financial situation by listing your assets and debts to make the most out of every session.

Begin paying off debt

This may sound similar to the first tip but most Americans tend to put off paying off debt until the very end. In fact, a report last year found that roughly 46% of all Americans expect to retire in debt. This is contrary to the goal of financial security.

There are two ways to approach debt: one can pay off smaller debt first in order to reduce the number of monthly payments and interest rates to deal with; or one can tackle the debt with the highest interest first.

This reduces its weight on your income in order to free up money for savings in order to reach a debt-free retirement. After all, what’s retirement with worry? Financial security is a lifelong goal for most and that is why it is important to start now.

For more finance and business advice do read our other articles on FedRegsAdvisor.com

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