by Maria Lahiffe
Working in the non-profit sector is rewarding. We all get out of bed every day because we know that our efforts are helping to make our community stronger. We generally get paid less, though, than we would in the private sector. That is fine, but it means that we need to be more disciplined with our finances, to make sure we and our families are set up for a promising future. Here are some steps you can follow to get going on that path.
Click here for part one, steps 1-4. In this post we’ll go beyond the most basic steps.
The financial goals you set in step 1, and setting aside your emergency fund, will require money. The less money you spend servicing debt, the more you’ll have for your goals. Start by targeting your smallest debt. Every time you eliminate a debt, you eliminate its monthly payments, which frees up that much money to put towards a bigger debt.
The most important thing about retirement savings is to start early. That way you take advantage of compound interest. Arrange for your bank to take off 10% of your paycheque every pay period, so that you don’t even see the money in your account. Then, when you get a pay increase, increase the percentage of your contribution – you’re used to living on that amount anyway. The most important thing is to start, and to contribute consistently.
There are lots of big upcoming expenses which you could wish to save up for, whether it is your children’s education or the trip of a lifetime. You may want to save up to buy your next car, so that you can avoid going further into debt when you do replace your ride. Like saving for retirement, the best way to save is to arrange for your bank to take the money straight off your paycheque every time you get paid. That way you never see the money in your account, which makes it easier to live on less.
There are lots of things you can’t possibly save up for, which is why people buy insurance. There are different kinds of insurance, and you probably need them all: auto, home, health, life insurance. What many people overlook is that insurance allows you to respond to catastrophe without draining your financial resources. This is why insurance needs to be part of your overall financial plan.
Financial planning does not end with your death. You need to specify what you want done with your assets after you are gone. If not, then the best case scenario would be for your survivors to end up in probate court deciding how to distribute your assets. At worst, everything you worked for could just end up down a sinkhole. Take some time to talk with a trusted attorney, to determine a workable plan. You can modify it over time as your circumstances change. This is a big thing you can do for your loved ones.
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