There's no getting around it. We all rely on money to pay our bills and live our everyday lives. Financial decisions can be some of the most important and most difficult decisions we can face in our lives. While we will make money decisions on a daily basis, there are five critical decisions that you will face and need to make. These decisions can make a huge impact on your financial future going forward.
Deciding to Be A Saver: In order to save money, your income must exceed your expenses. This can be a very difficult thing to reign in, however, starting with a budget and making a plan can help you get into the habit of saving. As your income increases, you can increase the amount you save!
Deciding to Connect to the System: While some people may prefer to not have bank accounts, having them can save you a lot of money in the long run. For one, although usually meager, you will typically earn some interest on your money. Secondly, having bank accounts gives you access to services such as check cashing that you would otherwise have to pay a fee for. Most banks also have access to online bill pay which can save you from paying for checks and stamps! Over time, the savings can really add up.
Deciding to Become An Investor: Investing is completely voluntary. However, unlike just putting money into a savings account, investing allows you to diversify your money among a variety of places such as the stock market, real estate and retirement accounts. While the market ebbs and flows, investing over time can see a much larger return on investment compared to putting money into a savings account alone.
Deciding When to Start: Starting good financial habits such as saving can make a giant impact over time. For one thing, interest compounds and you gain more over time. Secondly, the earlier you start saving, the longer you will be able to build up your nest egg for retirement. Important to note: it is never TOO LATE to start saving!
Deciding When to Take Social Security: You can take your social security benefits as early as age 62. However, if you are able to wait until age 70, you will get the max benefit amount, which equates to 76% higher benefit payment amount compared to if you took your benefits at age 62. Every person's situation is different, and meeting with a financial advisor is best to discuss your individual situation. For some people, retiring earlier makes sense, while for others, waiting makes sense. The bottom line is you want to leverage your retirement as best as you can so you don't outlive your money.