Personal finance is something that confuses many people. Everybody seems to know that it is important to have financial issues in order, but for most of us, this goes no further than always paying our bills and managing our bank account. At some point, however, you must start thinking about investing and planning.
Reluctance and Confusion on How to Start
Unfortunately, this is something that confuses many people. A lot of people worry that it is about being good at math, which is an even greater barrier. In reality, it is simply about having common sense. This means that you have to think about what your priority goals are, after which you need to look into the financial strategies (the easy ones) that can help you reach your goals. Learning about the basics before you actually start to invest your savings is, of course, important, but it isn’t rocket science. You don’t have to learn about complex investments like variable annuities if you are just a regular person. Those are the types of investments that, quite rightly, frighten people and, unless you are a financial advisor yourself, it is likely that they won’t help you accomplish what you actually want to do. You can invest your money using simple and cheap mutual funds like index funds, and your own bank account.
How to Start Planning for Your Retirement
First of all, you need to have all your records in place. Have a file for your insurance policies, one for your bank statements, one for your retirement plan, one for your mutual fund, and so on. Essentially, anything that provides you with income needs to have its own file. Next, you need to list all the debts that you have.
Usually, single people tend to have the best grips on their personal finances. With married couples, it is often the case that one person handles all the finances, while the other person has no clue about what is going on. If this is the case with you, sit down with your partner and make sure that you are both fully aware of what comes in and what goes out and what the plan is to ensure there is a positive bank balance at the end of every month. You need to know where money is currently coming from and going to, and what would happen if one of you were to pass away.
If you have been widowed and your partner had everything in order, then take the time to grieve before you start to tackle this task. However, do use your time to start saving, for instance, by banking the proceeds of your partner’s life insurance. There are some banks that offer excellent interest rates, meaning you start to earn as soon as you start to learn. The one thing that you do have to figure out straight away if you are widowed, is what your monthly budget is. That way, you will know how much you can spend on the things that matter with you without dipping into your savings.