According to the Internal Revenue Service (IRS), certain life events such as divorce, birth and marriage have a significant tax impact. In addition to that, other financial implications and expenditures such as the like purchases made for good and services make these events more expensive. For these reasons, you are advised to plan effectively to ensure that you handle these events, some of which are unavoidable, smoothly.
Here are a few tips on how to live smart and still enjoy financial freedom when going through life events.
Save For Retirement
According to U.S.A Today, one-third of Americans have almost no retirement savings. This is mainly due to ignorance and debts accrued during the working period. Such individuals are usually forced to seek post-retirement jobs due to lack of a primary source of income in terms of retirement savings.
Retirement is inevitable, despite the fact that there are jobs that have no retirement age in the United States. Even with such a job, one should prepare for old age life because earning power reduces as you grow older.
To prepare and save for retirement, you should know your retirement needs, contribute to your employers saving plan such as the 401 (k) plan and avoid touching your retirement savings until your actually retire.
Apply And Pay For Insurance
Insurance is basically a means of planning ahead for possible, unpredictable life events. For example, health insurance is used to pay for accrued hospital bills in the event you develop any medical condition. Unlike life events such as college, death also can be unpredictable. Life insurance pays your beneficiaries when you pass on, leaving them with sufficient financial security enough money to proceed with life without you.
You can also look for other types of insurance you can pay for to fully insulate you and your family whenever unexpected events take place.
Invest In Different Areas
In 2008, during the economic meltdown, the banking investment industry for instance, suffered a major downfall. People with investments in this area had limited sources of financial solace while people who invested in other different areas had some sort of reprieve. This was a great lesson on the need to spread the risk when investing.
There are numerous investment options in the United States you could consider. One of them is the stock market, which despite the fact that it’s reportedly steady, surprisingly fewer Americans are investing in this area.
Two-thirds of Americans do not budget for their expenses, according to a Gallup study. The survey further showed that Americans with higher incomes tend to stick to a budget, suggesting that this is a successful trick to being financially stable and better prepared for life.
Budgeting helps you to allocate money to other areas of your life and save better, equipping you well for uncertainties and major life events such college. It’s worth noting that less than 40% of Americans can handle a substantial cost beyond their budget. It is therefore prudent for you to seek other supplementary methods of saving money.
For you to live smart, you need to be wise and apply financial wisdom in your life. Budgeting for example, will help you stay focused on your goals while insurance will help you divert certain risks to third parties in case of unpredictable incidences. For better options and more advice, visit your certified financial adviser.