clipping coupons and scoring flights
with credit card miles can save a few
bucks here and there but achieving
long-term financial stability requires a
much more holistic approach let's look
at six big personal finance topics
budgeting saving debt taxes insurance
and retirement and discuss a helpful
principle for each number one when
budgeting consider focusing on the
big-ticket items you may have heard
you'd be a millionaire if you just skip
your morning latte but it's likely that
you can save more by cutting costs on
the expensive stuff like housing and
transportation according to Kelley Blue
Book in 2019 the average new car costs
about $37,000 but buying the same car
pre-owned could save more than ten
thousand dollars much more than a year's
worth of lattes number two when setting
savings goals be specific about your
plan to get there it's easy to say I'm
gonna save six thousand dollars for
retirement this year but you also need
to define your tactics for pursuing your
goal sub goals can help guide your
saving strategy if you want to save six
thousand dollars this year think about
how you might save $500 this month by
increasing your income or trimming your
expenses by about a hundred and fifteen
dollars a week these mile markers can
help you assess how realistic your goal
is and help you monitor your progress
number three avoid high interest debt
and loans for items that could quickly
lose value you might have heard to avoid
debt at all costs but not all debt is
created equal
one type of debt to avoid is debt with
an interest rate higher than five
percent like credit card debt carried
for month-to-month also try to avoid
going into debt for anything that is
likely to quickly lose value like boats
RVs jewelry and other luxury goods but
there are times borrowing money
since for example loans for an education
or starting a business are often
considered healthy debt because they may
lead to more income down the road for
some a low-interest mortgage might be a
good use of debt because a house has the
potential to appreciate an even using a
credit card as long as you pay the
balance in full every month can help
improve your credit score by showing
lenders you can responsibly manage debt
but healthy debt only helps your credit
score if you make your payments on time
so if you're looking to increase your
credit score only borrow money you're
confident you'll be able to pay back
number 4 reduce your taxable income
this doesn't mean make less money this
means find ways to pay less taxes on the
money you make one way to do this is to
receive income in a tax-exempt form
meaning get compensated in a way that
isn't taxable for example many employers
offer benefits that allow you to receive
or set-aside untaxed money for things
like retirement health care education
transportation and childcare a second
way to potentially reduce your taxes is
to defer them meaning pay your taxes
later by contributing to a traditional
IRA or 401k with these types of
retirement accounts you don't have to
pay taxes until you withdraw your money
during retirement when your tax rate
might be lower number five
avoid insurance for expenses you can
afford to pay out of pocket depending on
your personal situation
you may need car insurance home or
renter's insurance or life insurance and
everyone needs health insurance studies
suggest that more than 60% of all
bankruptcies are related to medical
issues so strive to have at least
minimum coverage but remember that the
purpose of insurance is to protect you
in unfortunate scenario
in exchange for protection you make
regular payments to an insurance company
called premiums premiums are guaranteed
and often ongoing expenses for smaller
valuables like electronic devices you
may want to skip insurance if you can
afford to replace them because paying
for coverage you might never use can be
a waste of money and finally number 6
don't just save for retirement invest
for a retirement
realistically just saving isn't likely
going to be enough to reach your
retirement goals investing can help grow
your money over time as you can see if
you invested $1,000 in stocks in 1975 by
the end of 2018 your investment would
have been worth over one hundred and
thirty thousand dollars how can $1,000
grow so fast
compound interest this means earning
interest on interest over time which can
help investors experience exponential
growth or growth that occurs in an
increasingly rapid rate
contributing to retirement accounts like
401ks and IRAs can potentially help you
save on taxes and allow your investments
to compound even faster
so remember when budgeting consider
focusing on the big-ticket items when
setting savings goals be specific about
your plan to get there
avoid high interest debt and loans for
items that will quickly lose value
consider taking steps to help you reduce
your taxable income avoid insurance for
expenses you can pay for out-of-pocket
and finally consider investing for
retirement while there's no shortage of
personal finance advice out there
cutting through the noise to focus on
high impact adjustments can potentially
have an enduring effect on your
financial future thanks for watching
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