Money management is a tough job. It requires you to take stock of your current financial condition and set realistic short-term and long-term goals. Many people prefer to make a budget to control their expenses, but they give up in the middle.
This is because many of you think money management is just creating a budget, and that is all. It includes but not limited to retirement, emergency cushion, and clearing all debts. Most of the people do not when they should start saving for retirement or when they should plan a baby. If you are one of them, here are the answers to questions that often confuse you.
Financial Question: Should I create an emergency cushion?
Even if you are earning a fair amount of money, you should have an emergency cushion. You never know when life throws a curveball. Unexpected events can happen at any time, and therefore you should have an emergency cushion.
This will help you tide over when you are in a tight spot. Temporarily job loss, car repair, boiler breakdown are some of the situations when you will need an emergency cushion to dip into.
Financial Question: When should I start putting aside for retirement?
You often do not need to worry about retirement saving because it is too early to think about it. When you start saving for your golden years, you find that your income is not enough to help you reach your goal sooner.
Therefore, you should start saving for retirement as soon as possible. Experts say that you should start doing it when you turn 25. Make a retirement saving plan and follow it rigorously.
How much money should I transfer to emergency cushion?
Most of the time, you have a question about how much amount you should have in your emergency cushion. Experts suggest that you should have at least six-month worth of living cost, so you can manage to meet your regular expenses if you lose your job or any other unexpected event pops up.
However, it is not as easy as it seems. It depends on the amount you earn how long it will take to reach your goal. A rule of thumb says that you should start with 10% of your monthly income. You can make it 20% of your income allows for it. Transfer a certain percentage of your income every month and stick to it.
How much amount should I have in my retirement funds?
There will never be a straightaway answer to this question because it depends on how you want your retirement life. If you do not want it to be luxurious, you can make do with little cash. However, if you have plans to explore the world or live a luxurious lifestyle, you will need a lot of money. You should sit and set a retirement plan considering your aspirations and needs in your retirement life.
Should I save or settle debts?
When you have outstanding debts, you may not be able to decide whether you save or settle debts. If you do not save, you will end up taking out cash loans in 1 hour in Ireland to tide over, mounting up your debt, and if you do not pay off your current debts, you will end up paying more money in interest.
You should build an emergency cushion at the time of clearing your debts. However, it can be quite challenging. In that case, you should pay off your debts first and then start saving money for an emergency cushion. If you have some dues to be repaid in fixed instalments, try to balance both saving and repayments.
If you have multiple debts like quick loans in Ireland, credit card bills and a guarantor loan, try to seek help from your lender if they can put you on another repayment plan or you can consider debt management plan or consolidation loans. It will help you quickly settle your debts, so you can start stashing away for a rainy day.
These answers could be enough to make you understand what you need to do to reach your goal.