Simple Steps for Financial Freedom
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Getting control of your finances might feel overwhelming, but it doesn’t have to be. Whether you’re at the start of your financial journey or are well into it, there are simple steps you can take at any point to manage your money and put yourself in a better financial position.
Here are some essential strategies to help you set clear financial goals, create a budget that works for you, and build an emergency fund so you can weather any storm.
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Setting clear financial goals is key to achieving long-term financial security. Whether you’re saving for retirement, paying off debt, or planning to buy a home, defining your priorities helps you stay on track.
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Start by identifying short-term goals (the next 1-3 years) and long-term goals (5 or more years away). You might have a short-term goal of a dream vacation and a long-term goal of retiring with a certain amount of money saved.
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Specific, Measurable, Achievable
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Each goal should be specific, measurable, and achievable in the timeline you’ve set out. For example, instead of “I want to save more,” try, “I will contribute $200 per month to my SPP retirement fund.”
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Of course, simply setting the goals isn’t enough – you must take the steps to follow through. Being very deliberate by setting up a savings account, like an SPP account, is beneficial. Automatic payments and deposits enable you to stay on course. SPP offers automatic contribution options to help you achieve your financial goals.
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Regularly review your progress to ensure you’re still on track and adjust as your financial circumstances change. Be aware of how much you’ll want to have saved for retirement and keep that in mind as you set your other financial goals.
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A budget is your roadmap for managing your money. It shows how much you earn and sets limits on how much you spend. It also guides how much you can save.
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To create a budget, start by listing all sources of income and tracking your fixed expenses (rent, utilities) and variable expenses (groceries, entertainment).
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Once you see how much money you’re spending compared with how much you bring in, set spending limits that align with your financial goals and allow you to save.
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One popular budget is the 50/30/20 rule: 50% of your income goes towards your needs, 30% goes towards your wants, and 20% goes towards your savings, including your SPP retirement plan.
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Although budgeting may feel restrictive, it gives you the freedom to make informed financial decisions, reduce your debt and increase your savings. Remember that your budget can be adjusted throughout your life, so review it periodically to make sure it still works for you.
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Life is full of surprises and an emergency fund can help you when the unexpected happens. Ideally, an emergency fund can cover 3-6 months of living expenses, but that might feel overwhelming if you’re starting to save.
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Start small. Aim for a fund of $500, which can still make a big difference. Once you have $500, aim for $1,000. Keep increasing the goal until you have enough saved for a few months.
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Keep your emergency fund separate from your regular accounts and only pull from it for true emergencies, like a loss of income, car repairs, or medical bills. Once you’re in a position to build that account up again, do so as soon as possible.
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While it might seem difficult to put money away, it can give you peace of mind and prevent financial stress if you face an unexpected expense.
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Stay on track for retirement
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Your life and financial situation is constantly changing. As you update your goals, priorities and budget, make sure your contributions are keeping pace!
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