The way you live your life impacts your financial security.
If you’re not completely satisfied with your responsibilities, salary, or career path, it’s never too late to switch careers. You may need to refresh your skills or go back to school for additional training. If you find yourself unemployed, this might be a good time to consider a dramatic change and get trained or you may want to stay in the same field but change employers. Update your resume periodically and make sure your skills keep pace with innovations in your career field. If it looks like corporate downsizing is going to happen at your place of employment sometime in the future, you may want to be one of the first to start looking for another job. A long period of unemployment could destroy your financial security.
Your housing costs
While owning your own home is often referred to as "The American Dream," being 'house poor' is a nightmare for some Americans. The square footage of the average American home has grown steadily over the past several decades and so have the costs. If your mortgage, taxes, and maintenance expenses deplete a large part of your income, consider moving to a smaller house. What you save in housing costs could be significant over the long term. You should, of course, also take into consideration if your house is worth less than the outstanding mortgage before making a decision.
Your debt load
It’s easy to get trapped in a vicious cycle of buying on credit and paying only the minimum every month. Soon, you’re paying more in interest than your purchase actually cost. Over time, credit card debt can have a devastating impact on your finances. But you can stop the cycle by paying off your balances and using cash for new purchases.
Your insurance costs
Unfortunately, accidents happen. Sometimes cars crash, houses get struck by lightning, and people get hurt. Skimping on insurance could lead to financial ruin. Protect yourself and your assets with adequate insurance. In addition to home, auto, and medical insurance, make sure you also have disability insurance. If you’re unable to work, disability insurance may replace a substantial part of your income. Don’t forget to protect yourself against lawsuits with umbrella insurance.
Experts say you’ll probably need 75-80 percent of your working income during retirement. Since we’re living longer, you could end up spending more years in retirement than you did working, so saving for retirement is not something to postpone. If you work for a company that offers a retirement plan, participate and contribute as much as you can. If you can, consider contributing to an IRA, as well.
Investing can be pretty confusing territory for many, but it’s important to help you achieve your financial goals. The first step is to determine your timeframe and tolerance for risk. Doing this will help you develop an appropriate asset allocation before deciding exactly how to invest your money.