How do you know how much you’ll need to bring in each month to live the lifestyle you dreamed of? What is that magical number to enjoy retirement and not have to stress about money… or even worse… have to go back to work?
Here are a couple things you must do to lock in on that early retirement date.
First, find out what you can expect to get from social security. The quick and easy way to find out is to use the Social Security Administration’s Quick Calculator. In less than 2 minutes you will have a pretty accurate number.
Next, visit Vanguard’s Retirement Income Calculator. This calculator shows you how much you need to retire, if you are on track to retire and compares what you may already have to what you will need.
After running your numbers through these calculators, and you see that you will hit your target…congratulations!
However, if you fall short, then it’s a good thing we had this conversation now. We surfaced any issues you may have to address now, so you can make the necessary adjustments to reach your retirement lifestyle goals.
10 Ways To Make Managing Your Money Easier
It’s not a secret, that many people, if not most people, find it difficult to manage their money. Unfortunately, the effects can be catastrophic for individuals and families, who find it almost impossible to recover.
Though America as a whole is stricken by “the Debt Disease,” recovering from debt and money problems can be surprisingly easy to do. That’s why in your Financial Fitness Magazine for May, we’re visiting ten ways you can find financial fitness, and start up the road to living with financial peace of mind for the rest of your life. It all begins with…
Way #1 – Create a Modest Budget and Stick To It
Now, I know what you may be thinking. Awwww, I have to have a budget? I’m no good with numbers. Well, when you think that way, you automatically become that way.
In reality, keeping up with the numbers of your spending, your bank accounts and your savings and investments can be as easy as thinking about your personal life much like a business.
Pick up a free or low cost accounting software, then enter all the revenue you earn each month. Next, enter the amount of your gross revenue for money that goes to your government deductions, and enter your expenses each month. If you end up “in the black” you’re doing good. If you’re “in the red, you are overextended on your budget, and you need to find ways to either earn more, cut expenses or both.
Way #2 – Know How Much You Earn After Taxes
A great way to not get overextended with your budget is to always know how much you earn. However, you must remember to include funds taken out of your paychecks for federal income tax withholding and other withholding like state taxes (if that applies to your state), Social Security taxes and Medicare taxes. If you’re not an employee, it is your responsibility to manage these taxes yourself.
Way #3 – Know How Much You Spend In An Average Month
This is where an inexpensive (or even free) accounting program comes in handy. Keeping track of your expenses can be a daunting task, especially when it comes to paper receipts. You can make your life much easier with a simple accounting program.
Way #4 – Eliminate Spending That Is Not Necessary
This step is one of the easiest ways to save a boatload of cash each and every month, each and every year. First, cut all the recurring expenses you have, but don’t use or seldom use, like magazine subscriptions, recurring gym and fitness memberships (that you go to maybe 3 times a year), and all the billing for streaming services you forgot you had, and never watch or listen to.
Way #5 – Put Your Debt In One Place and No Where Else
It can be difficult to track your debt, and the progress you’re making whittling it down, if you have five, ten or twenty credit accounts. Instead, consider consolidating all your debt into one debt account that you can easily manage. Doing so will usually reduce your interest rate, too. Another option is to refinance that balance into your mortgage (if you own your home) to zero-out the balances on your other credit accounts. Just be sure to not run up the balances on the other accounts.
Way #6 – Always Have an Emergency Fund For Surprises
There’s a saying that goes… “Always expect the unexpected.” With your personal finances, that means don’t spend the last dollar you have in your wallet. Instead, you can breathe easier, not worrying about having an emergency happen, when you are prepared.
Your Emergency Fund is where you build a reserve that you don’t touch. (Unless there is a real emergency, when you’ll be glad you had your emergency fund.) While there are no emergencies, it’s a good plan to add money to your emergency fund when you can. This solidifies your peace of mind, so you don’t have to worry.
Way #7 – Put Your Saving Schedule On Autopilot
It really is not difficult to save regularly, if you know how. Many people try to save, but they let the ups and downs interrupt their progress. They get side-tracked, and before you know it, they haven’t put a dollar in savings for a year. Here’s the secret. Go into your bank website, and set up a monthly recurring money transfer, from your main checking account, to your savings account. That’s it. Like magic, your savings account will grow like never before.
Way #8 – Review Your Credit Reports Three Times A Year
This may seem like a lot to be checking your credit reports, but it isn’t. Here’s the logic behind this. There are three major credit reporting agencies, Equifax, Experian and TransUnion. The process is as easy as this… There are twelve months, divided by three is four. At the end of month four, April, review your Experian report for errors, or anything else that does not seem right. If you find a problem, contact the credit bureau right away. Four months later, it’s August, time to do the same with your TransUnion credit report. Then in December, four months later, review your Equifax credit report.
Way #9 – Use An Accounting App To Know Where You Stand Monthly
We talked about this in one of our previous ways to Make Managing Your Money Easier. Here are some options for running your finances like a business, using an accounting app. Look at Quicken Starter, Quicken Home and Business, Small Business Bookkeeping and CPA Charge. And Now here are some free apps for home finances, including GnuCash, Buddi, AceMoney Lite, HomeBank, and Buxfer. Pick one that you think will be easy to use for you, and start using it this month.
Way #10 – Manage Your Money Like The Wealthy Do
The wealthy don’t do “instant gratification.” Why? Making yourself happy now is likely to make you sad down the road. The wealthy know the difference between wants and needs. The average person thinks wants are needs. This is flawed thinking that will come back to bite you later. The wealthy use payroll deductions, to invest automatically to their retirement accounts. The wealthy save 15% of every dollar they earn, for life. The wealthy also understand the cost of debt. Paying on credit really means you’re okay with paying more for everything you.
Start using these 10 Ways to make managing your money easier today. You’ll have a more enjoyable life in the long run, and have much more cash in the bank when you do.