When you’re over fifty, being sensible around money is even more important. That’s true even if your past record with money hasn’t been that good. Certainly, the truth is that there’s less time available to course correct later. Also, there’s less time to accumulate the money you’ll need in retirement unless you plan to continue working forever. Here are four tips for better financial management for the over 50s.
Save First, Spend Last
The idea of saving first and spending last is a simple plan that works.
Rather than living off your salary and saving what’s left, decide a fixed percentage or amount that you’ll save from your paycheck (while you’re younger and healthy enough to still have a job) and sock the money away.
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Set Financial Targets Properly
To calculate properly for retirement, you need to do things backward.
First, calculate what you need in income to retire on, including investment fees and taxes on income.
Second, divide this figure by 4% to get the amount of money needed to live on.
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Third, use a compounding calculator to enter the starting principal, planned annual investment, number of years until retirement, and compounding interest rate (think 4% less 0.5% fees, equaling 3.5% in inflation-adjusted terms) to arrive at an idea about what your savings plan could amount to, in real terms.
Fourth, check if this compounding calculation confirms whether you’ll be saving enough each year or not? If not, can you save more of your current income or do you need to get a side hustle to increase your income?
Affordable Credit Cards and Better Management
When you want a credit card to avoid paying the money out of your checking account right away, then relying on affordable credit union credit cards is fine. They can ensure there’s enough in the checking account to pay for current bills. Then pay off the balance on the card in full next month.
The trick is, to not let the credit limit run away from you. No matter how cheap the rate seems, it builds the balance up quickly when only paying the minimum payment. You can try merchant services for bad credit and make it a rule to clear the full balance every month to keep convenience while avoiding the interest and possible fees.
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Have Enough Insurance
Having too little insurance or not being insured at all can really set you back. At an older age, a legal judgment against you, a major problem with your home or a medical issue could prevent you from preparing for a good retirement.
Ensure that you have the proper insurance to cover the major risks. This way, you won’t suffer a setback that you cannot recover from in time. Remember, while you may discount the value of insurance, the idea is to mitigate risk. Being self-insured isn’t sensible when you’re older because there are not many working years remaining to get back on your feet.
Better financial management when you’re older is all about reducing risk factors, cutting down on debt such as personal loans, credit cards, or title loans, managing money well and setting aside savings/investing for the future.
James Daniels is a freelance writer, business enthusiast, a bit of a tech buff, and an overall geek. He is also an avid reader, who can while away hours reading and knowing about the latest gadgets and tech, whilst offering views and opinions on these topics.
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2 thoughts on “Better Financial Management for the Over 50s”
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