Life after debt - Now how to manage finances after being debt free
Congratulations! You are finally debt free. But, your job doesn’t end here; rather, it is the beginning to secure your financial future.
So have you thought how will you manage finances after being debt free?
You might have dreamed about this day when you’ll be debt free.
Nearly every one of us has gone through similar situations. It might not be paying off an enormous amount of debt; but, paying off a mortgage or a student loan gives a similar mental satisfaction and sense of achievement.
How can you celebrate your achievement?
Think what you wanted to do for a long time but couldn’t do it due to stress and lack of savings.
Yes! You can throw a party if you want to. Call your friends who have helped you in your debt free journey.
Have a blast! Eat, drink and dance to your favorite tunes.
How to manage finances after being debt free
- First of all, plan a suitable budget.
- Secondly, don’t commit the mistakes that led you into debt.
In your debt-free journey, you surely have analyzed the wrong financial steps you had taken; so now avoid them.Here are 7 more tips to secure your financial future.
1 Choose a new financial goal to achieve
Take some time, rather days, and decide your financial goal(s). Is it buying a dream home? Is it increasing your net worth?
Whatever be it, start saving the required amount and make a financial plan.
The most important thing is that you’d have to continuously motivate yourself and take help from your family members.
2 Save for your golden days - retirement
Financial experts say that you should start saving for retirement right from the first month of your job life.
According to Geoff Sanzenbacher, a research economist at Boston College's Center for Retirement Research, a person needs to save about 70% of his/her current annual income to maintain a similar lifestyle after retirement.
3 Invest where you’ll get profitable return
It is relatively easier to plan for retirement, but a bit difficult to follow it.
It is advisable you learn it properly and take help of an experienced personnel to invest in stocks that will give you profitable returns.
4 Have required insurance coverage
Purchasing required insurance policies is another necessity.
Along with it, consider buying a travel insurance policy along with other coverage as per requirement and financial condition.
5 Build an emergency fund right from today
No matter how healthy your finances are, an emergency can weaken your solid financial footing.
How can you prevent it? It’s simple. Build an emergency fund.
Deposit a certain percentage of your income into an emergency savings account every month.
You can increase the amount if you feel it’s required, and you’re able to do it.
6 Don’t compromise with your personal goals
While managing your finances after being debt free, don’t forget about your personal goals and ambitions. They demand importance too!
Do you need to spend more time with your family and dear friends?
Are you wanting to switch job from a long time?
Do you want to go for a long awaited vacation?
Have you been wanting to update your skill?
Decide and take out time for personal gratification.
7 Incur good debt and avoid bad debt
You have to incur debt to achieve financial freedom. Does it sound like an impossible thing?
Well, it’s not so.
If you’re taking out a student loan, then it is a good debt, as it can help you have a good paycheck. In turn, it’ll help you manage your finances well in the future. Only you’ll have to manage the debt well and repay it within the stipulated time.
However, try to avoid credit card debt and payday loan debt, which can push you into experiencing severe debt problems.
It is better to check out debt relief options and pay off debt before you take out any loan. It will help you obtain an amount which you can repay comfortably.
You have worked a lot to get yourself out of debt; in the process, you might have sacrificed some of your enjoyments to save precious dollars.
This is the time to make that big purchase or to plan that long-awaited vacation.
Wait for a while!
If you don’t have any emergency fund, it’s better to build one before planning an expensive vacation. Similarly, you can save a decent amount for buying a new house.
Plan carefully and splurge a little with the extra allowance in your budget. It will keep you motivated and help in your journey of achieving financial freedom.