Do You Have Financial Common Sense?
Will Your Financial Sense Aid Your Retirement Planning?
Retirement planning is not complicated. It’s about financial common sense, period. If you lack financial common sense you will not accumulate enough money to afford retirement, period.
There is no reason to be confused about which retirement strategy you should use or which retirement plan product you should buy. Just stick to basic common sense to avoid financial mistakes.
Foggy financial sense clouds your vision. If it becomes too cloudy you will make bad financial decisions which will halt your retirement planning. Here are 4 tips to help you clear up your financial common sense.
Step #1 – Analyze Your Spending Habits
Poor spending habits will crush your ability to invest for retirement.
Even though you have heard it over and over again about the importance of living below your means, it’s worth repeating. If you can manage to live on less than you earn you can build up a financial cushion. It’s a big financial mistake to spend everything you earn.
Living from pay check to pay check blocks your ability to build up a financial cushion. This cushion comes in handy when the market takes a tumble or you run into an emergency and need money fast. In these situations you can tap your financial cushion instead of dipping into your retirement investments.
Step #2 – Are You A Debt Magnet?
Debt is the kiss of death when you are investing for retirement.
It’s a bad financial decision to invest into your retirement plan if it earns a meager rate of return while you are also holding high interest credit card balances. Financial common sense should tell you that you are not getting ahead if you are paying more on your credit card debt than you earn on your investments.
It’s best to stop contributions to your retirement plan until you pay off your credit card debt. Once your debt is paid down to zero start up your contributions again. Also tighten up your spending habits to avoid building up your credit card debt again.
Step #3 – Do You Have A Plan?
Sooner or later you will reach retirement age. You jeopardize your financial future when you avoid or put off planning for your retirement.
Procrastination will not change the fact that you will eventually reach retirement age. All procrastination does is alter how much you will have available for retirement income at that age.
Step #4 – Do You Make Proper Investment Decisions?
It is wise to hold some liquid investments. Try not to tie all of your investments up in stocks, bonds or mutual funds. Hold some money in cash equivalents such as bank cd’s and or money markets.
Your Retirement Depends Upon You
Financial common sense can help you invest enough money to be able to afford retirement someday. You can achieve your retirement dream by practicing financial common sense.