Tips for building financial stability

If you want financial stability you must have a solid financial strategy. With so much uncertainty in the world, it can be difficult to take steps to put a long-term financial strategy in place. A study from Fidelity Investments’ Retirement Mindset Study, reported by Financial Advisors magazine, found that 87% of Millennials didn’t have a retirement plan. And almost 40% of people said their top financial priority was just paying their bills, according to a survey from BankRate.

Outlining your financial goals, assessing your cash flows, risk management planning and budgeting are all vital parts of a good plan. Planning diligently helps give you more financial stability and greater peace of mind.

Continue reading to learn more about the core parts of a good financial strategy.

1. Outline your financial goals

The first step to creating your plan is detailing your financial goals. These can include paying off any outstanding debts, mortgaging a house or saving for retirement. Be specific in your planning.

The more detailed your goals are from the beginning, the more effectively you can plan. Prioritize each goal depending on its level of importance to you and create a timeline to achieve them.

2. Assess cash flows

It’s important to fully assess all your income sources to determine if you can meet your financial goals. Ensure that you constantly update your cash flow projections to account for changes in your income.

Starting a new business, being promoted, losing your job and getting married can all significantly affect your available income. Your plans should reflect any changes to ensure you’re still working toward your goals.

3. Create a risk management plan

Unforeseen events can have a negative impact on your financial stability. You can mitigate this risk by taking proactive steps, such as having life insurance. How can insurance protect you from financial loss? Life insurance can help make sure your loved ones are taken care of if you die unexpectedly. Have a risk management plan in place to help protect your family no matter what.

4. Set an appropriate budget

When it’s time to implement your plan, you’ll need an accurate outline of your monthly expenses to ensure you’re able to make these payments while still working toward your financial goals.

It can be easy to overlook certain expenses, so make sure you don’t forget to include monthly subscriptions or regular small expenses. Improper budgeting can make it more difficult — and sometimes even impossible — to achieve your goals. Accurate and detailed budgeting can help you save more and reach financial stability.

5. Manage debt

On average, Americans carry debt worth more than $92,000 each, according to Experian. It’s important to effectively manage your debt and avoid opening new lines of credit if you’re already over your head in unpaid expenses. Missing payments or worse, defaulting on loans, can seriously damage your credit score and make it more difficult to open new lines of credit in the future.

6. Plan for retirement

A good financial strategy is rounded off by a strong retirement plan. It’s important to assess your current lifestyle costs to better determine how much you’re going to need in retirement. Use this calculator to learn how much you should be saving. Consider any sources of income or cash flows you’ll retain after you retire, like if you own income-generating property or receive a pension.

According to CNN Money, roughly 10% to 15% of your income should go to your retirement fund. Remember to account for Social Security benefits, which are currently paid to all Americans older than 65 years of age.

Ameritas is with you

It’s never been more important to have a solid financial strategy in place. You can’t control what happens in the world around you, but you can control how you manage your personal affairs to meet any unforeseen challenges. The above steps serve as a guideline to help you plan for your future and safeguard your financial stability.

Ameritas is in the business of fulfilling life. Bringing you valuable information to help you plan well and enjoy life is part of what we do.