Top 7 Finance Tips To Consider In Your 20s
In today’s economy, it is important to constantly keep your eyes on your finances. In an ever-changing world, the bottom line has become increasingly important as unpredictability reigns given the present economic and social circumstances in which we find ourselves. Below are seven financial tips that you should consider so that you can keep your finances in order and growing amid the current state of world affairs:
1. Assets and Liabilities
Evaluating your net worth is as simple as identifying all of the assets you own and weighing them against your financial liabilities. Assets include items such as stocks and bonds, savings accounts, cash on hand, real estate holdings, retirement accounts and other items of value such as collectibles and cars. Liabilities can be considered as student loans, bills, credit card debt and your mortgage. This will provide a strong picture of your financial situation.
2. Goal assessment
At least once a year considers your long-term goals but also take into consideration medium and short term goals as well. Continue to evaluate these as time goes on since they may become moot at certain points in the time given your changing life circumstances. Also, consider the cost of achieving these goals and whether you are on track to achieve them or not. Many long-term goals often do not change drastically and substantially on a year-to-year basis.
Short term goals, however, do change more frequently and these include saving for a house and paying off credit card bills. Continuing to evaluate whether these goals are still relevant is an important consideration that should be constantly reviewed.
3. Credit Report Check
Your credit report shows your payment history and the status of any credit accounts that are open under your name. Maintaining a high credit score is critically important if you wish to qualify for a loan at a good rate of interest. It is recommended that you check your credit report at least one time a year to make sure that is accurate. This will save you time and effort when and if you apply for a loan and are confronted with potential inaccuracies at the time you are attempting to purchase a vehicle or a home.
4. Who Are Your Beneficiaries?
Many of the accounts and investments that you have contained designations of beneficiaries – these are people that will collect on your account in the event you pass away. It is important that you review all of your investments and financial holdings at least once or twice a year to make sure that the beneficiaries you have elected are still appropriate.
Life circumstances can drastically change who you wish to identify as a beneficiary such as the birth of a child, death of a family member or divorce. Keep an eye on your beneficiaries so that your affairs remain in order.
5. Tax management
Keeping enough money to properly pay your tax bill is an important consideration as well. Your tax bracket determines the amount you will pay in federal income tax each year so you should constantly be aware of which bracket you fall into by learning about income tax brackets. In almost every case, your employer will withhold the appropriate amount of taxes from your paycheck. However, the amount of withheld often is different from the amount you will owe in income tax.
Self-employed individuals are required to pay estimated taxes on a quarterly basis. For them, remaining in close contact with their accountant is vital. You should review the amount you’re set aside to pay taxes every fall so that you’re not surprised when April rolls around and it is time to make your tax payment.
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At least once a year, you should review all of your coverages. These include your automobile insurance, homeowners (or renters coverage if you do not own your home), life and any other coverage you may maintain. Make sure that you are not over-insured and that the coverage that you have meets your needs. You may be paying too high of a premium or your deductibles may be too low, thereby causing your premiums to be excessively high. If you have dependents, getting insurance your life should certainly be a consideration for you so that they may have cash on hand to support them in the event of your passing. Considering disability coverage is another strong option since you may need it in the event you are unable to work.
7. Do your investments and goals align?
Your investments normally are held in a brokerage account or are your retirement plans. Most of the time they are made up of mutual funds, annuities and other products which are considered sound financial resources. Every quarter, you should check these investments to make sure that they are in line with your short term, medium-range and long-term goals.
By employing the above seven recommendations, you will ensure your own financial fitness for years to come. Put these recommendations into practice and you will see that your finances will stabilize and consistently increase as you become more regimented in your spending and saving.
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