Financial planning can help you reach retirement goals and keep you from making spending blunders and keep you from developing a lifestyle in which you are constantly trying to make up for spending mistakes.
In “Signs You’re Living Beyond Your Means” Yahoo! offers some tough love for those of us who think we are doing just fine but fail to realize that we are overspending. By their definition you’re living beyond your means if:
- “You couldn’t survive financially without your job’s income for at least six months.”
- You’re saving less than 10% of your pay.
- Your mortgage payment is more than one week’s salary.
- Your credit card balance has remained the same for the past year.
- You buy big-ticket items through interest-free, deferred-payment offers because you think you’ll be able to afford it next year.
- You use one credit card to pay another credit card’s balance.
- You pay an overdraft fee on your checking account every three to four months or more.
- Before buying something, you often think, “I know I shouldn’t, but…”
You have probably heard many experts say you need an emergency fund that equals six months of your salary and you may have heard some advise less of an emergency fund three months salary instead of six). However, you also know that you cannot create this emergency fund overnight. Rather than think it is impossible, work towards this goal. And if you need help getting there, you can rely on a Fee-Only Financial Planner.
Many of the habits listed above are connected to a lack of planning and specific goals. When you start with the end in mind and outline short-term goals (ex. vacation, house) and long-term goals (ex. college tuition, retirement), you will be better able to avoid financial pitfalls. Working with a financial advisor can keep you accountable: You can create a plan to pay down the debt you have, prevent yourself from incurring more unnecessary debt, and grow your money for the future.