With the holidays coming up, you might have your hopes set on receiving a new outfit or the latest gadget, but did you know that one of the greatest gifts of all isn’t something that can be wrapped and placed under the tree?
Financial peace of mind is having confidence that your financial future is secure, and it’s one of the greatest gifts that you can give yourself. When you have financial peace of mind, you don’t need to constantly worry about money matters because you’ve taken the right steps to mitigate risk and be prepared for whatever life throws at you.
If you can relate with the 73% of people who say that finances are their number one cause of stress, then keep reading to learn about six ways you can help give yourself the gift of financial peace of mind.
1. Get Out of Debt
“The average debt an American owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans,” according to Business Insider.
Some debt, like a mortgage, isn’t all bad because it helps your net worth and creates value in the long run. However, holding large amounts of debt, especially high-interest debt, can quickly get expensive, reduce your financial freedom, and lowers your credit score.
Tackling credit card debt is a great place to start in your journey to becoming debt-free, so check out these four strategies to help you reach your goal.
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2. Build Emergency Savings
Whether it’s an unexpected home or car repair, medical bill, or job loss, having an emergency fund of three to six months’ worth of expenses helps ensure you’re prepared to weather the storm.
To begin saving, set a goal to save $500 and start squirreling away money as you can. Automatically depositing a portion of each paycheck into a savings account is an easy way to steadily build your savings.
3. Get Insured
Insurance helps protect you against financial risks, and the right products can help you feel financial peace of mind.
- Health insurance covers medical expenses.
- Auto insurance protects against car-related accidents and damage.
- Homeowners/renters insurance covers damage to your home or belongings.
- Life insurance provides financial support to your loved ones if you pass away.
- Disability insurance replaces income if you’re unable to work due to injury or illness.
- Liability insurance protects against lawsuits for injury or damage you cause.
4. Save for Retirement
Thirty-one percent of adults say they aren’t sure they will have enough saved for retirement and 33% say they will not have enough saved.
Retirement-specific accounts like IRAs and 401(k)s provide incentives to save for retirement. They can give you tax breaks on your savings either now or in the future when you withdraw funds. And if your company offers 401(k) matching, be sure to save at least until you receive the full match.
Related: Strategies for Boosting Retirement Savings in your 50s and 60s
5. Work on Your Financial Literacy
Financial literacy is the ability to understand and effectively use financial skills. When you have strong financial literacy, you’re more likely to make smart decisions about money and be able to budget, save, invest, avoid debt—and have financial peace of mind.
Reading books and articles, listening to podcasts, and attending finance classes are all ways you can work to improve your financial literacy.
6. Work With a Financial Professional
There’s a misconception that only the wealthy work with financial professionals, and that simply isn’t true.
No matter the amount in your bank account, a financial professional can lend their expertise to guide you in managing your money and improving your financial peace of mind. A financial professional can help you create a plan for saving, investing, and reaching your goals while avoiding mistakes. Want more? Check out our blog, 6 Secrets to a Debt-Free Holiday Season
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