You have just made that last debt payment. You breathe a sigh of relief and think to yourself, “What now?” Well, now that you are no longer in debt you can start planning for a better financial future. The biggest thing to remember is to not overspend and start racking up the credit card debt again.
Budgeting For The Future
After getting out of debt you need to plan and establish a monthly budget. This may be one of the hardest things to do. You need to look at every expense and determine if it is necessary and can you afford it without using credit cards. Make a list of all your income and expenses. Having everything on paper really will help you see where your money is going! Set your budget and stick with it!
Once you see where you stand financially, you can determine how you can start saving for your future. The things that you need to consider include:
-Establishing an account for emergencies.
-Increasing or starting to contribute to your retirement funds.
-Investing in stocks, bonds or mutual funds.
Establish Emergency Funds
Now that you have extra money, the first thing you need to do with every paycheck is pay yourself. As silly as this may seem, it will help you create a stable financial future. The purpose of the emergency fund is to help you through tough times like:
-The loss of your job.
-Unexpected medical bills.
-Large car repairs.
-Unexpected home repairs, like a pipe bursting. You still have to pay the deductible for the insurance.
By depositing a budgeted amount from every pay, you can build a security net. Hopefully, you will not have to use the funds often and can continue to grow the account for the future.
Another way to help build your future financial freedom is to increase your contributions to your retirement funds. Putting additional money in your retirement account will increase your future retirement income. That increase in your future retirement income will allow you to live more comfortably and not have to worry about living expenses.
Instead of paying for debt, start setting money aside for you to treat yourself. You may have a dream vacation that always appeared out of reach. You can put some of the money that was going towards your debt payments into a vacation savings account or other treat for you. You can get the things you want; it just may take a little bit of time to save!
Being debt free is a great feeling! To stay debt free and build your financial future will take some work but it’s worth it. Remember, stick to your budget and do not rely on credit cards. Create and build an emergency fund and retirement account so you can handle the unexpected expenses and live comfortably during your retirement years.