Whether a person is a college graduate or a newlywed, it's important that he has a strong yet flexible financial plan so that he will thrive rather than live from paycheck to paycheck. Proper financial planning includes a budget, decrease in unnecessary spending, understanding the credit report and score and becoming more financially literate. But these are the initial steps. Here are additional ways to build a great financial plan:
Choose a career path based on what's in demand
While it might be practical and beneficial to choose a career that you're skilled at and passionate about, this might not be feasible when building a long-term financial plan. The key is to look for a career that is in high demand, pays well and that is still suited to your interests. A person may have studied social work in college but now there is a high need for nurses. She can get certified as a home health aide and have steady work in this field. She would be transferring her previous skills to the new career.
Make side hustle a home-based business
For those who earn extra income through side hustles, they can be bold and turn this gig into a profitable home-based business. If a person's side hustle is freelance writing and editing, then he needs to learn more about this craft and actively seek new clients through diverse marketing strategies. During this time the person should educate himself on managing and investing money wisely for the benefit of the business. Establishing a schedule just for side hustle work also helps.
Retirement mindset while still a teen
So often teens are told that they should focus on attending college and starting a career but these things alone will not guarantee long-term financial stability. In recent years college graduates have struggled to land their first job and many possess long term student loan debt. Teens should be taught to save and invest their funds even if they work at part-time summer jobs. This gives them the retirement mentality at the earliest age possible.
Building emergency savings
Unexpected life events happen and it is for this reason that a financial plan must include emergency savings. Families need to contribute part of their incomes every pay period so that they will have the resources they need for emergencies. These include sudden death, a medical procedure, job loss or divorce.
When families do not have health or life insurance, it hurts their financial plan. It is important that they have insurance to take care of medical expenses and funeral expenses in the event of a loved one. There are numerous affordable policies and families should research them to get the best policies for their needs.
About tax credits
Taxes take a chunk of some families' incomes but with tax credits, they can reduce their tax burdens and improve financial planning. There is the Earned Income Tax Credit and the Child and Dependent Care Credit for working families who need daycare services. There is also the Savers Credit, which benefits those with retirement accounts.
With the above-mentioned strategies it is possible for families to have a better financial plan for the future.