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Preparing for Retirement: 5 Things You Need to Do Today

Preparing for Retirement: 5 Things You Need to Do Today

It has been said that he who fails to plan, plans to fail. In the world in which we live, it’s all too tempting to focus on the here and now, rather than peer into an uncertain and somewhat frightening future. When it comes to retirement, however, the less light you choose to shed on your later years, the murkier and more foreboding they become. Whether you are starting your first job or winding down your last, here are 5 things you need to do to ready yourself financially for retirement.

1. Start Saving Today

Few people in their twenties, thirties, or even forties spend the time or show an inclination to start thinking about retirement. Work, kids, hanging out with friends—it’s all you can do to just keep the pace. However, this is the best period to start putting money away for the future, while your earning potential is climbing and time is on your side. The more you can set aside while you are young, the better—that money will continue to compound over time and be there when you really need it.

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2. Invest Wisely

Setting up an investment plan designed to benefit you in your later years is just as important as saving money while you are young. Distinguishable from the rest of your financial portfolio, your retirement plan features accounts such as a 401k or an IRA. These types of plans are fed by contributions from earned income, which grow tax-deferred over the life of the account. No matter what you do for a living or how much you make per year, if you are a working adult, this is something you need to establish as soon as possible.

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3. Put Health First

It’s always when you have good health that you take it for granted, or find excuses (like long hours at work) to push preventative healthcare down on the list of priorities. However, taking good care of yourself now is a winning strategy in planning for your future, as you will not only be fit today, but able-bodied in your later years. Most importantly, by seeing your doctor regularly, getting your heart pumping a few times a week, and eating right, you’re doing what you can to protect against medical pitfalls that can limit your ability to earn and save, or burn through your retirement savings in one fell swoop.

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4. Draw a Plan

When creating a thorough plan, sit down and consider as many factors as possible, including determining at what age you would like to retire, and how you envision living the rest of your life. You need to come up with an amount of money that you will require per month to meet your estimated expenditures. Calculate how much you need to save, along with any pensions or social security benefits, to meet your goal.

5. Live on a Budget

If you aren’t yet, it’s highly advisable that you experience living on a budget, much like the one that will be your reality in your retirement years. Not only will it prepare you for the future, but it can also shed light on how, why, and where you spend money, thus exposing ways to be more efficient. With the money you save, you can increase your efforts to get ahead, doubling down now on a bet that’s sure to pay off when you need it most.

Final Thoughts

There’s nothing wrong with living life in the moment, but it’s crucial that you also begin to plan for your future. By getting your savings in order, setting up the appropriate investment accounts, and having a solid plan, you ensure that your golden years will be rewarding ones.

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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