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How to Organize Your Finances for a Secure Future in College

May 23, 2018

When it comes to financial planning, gaining financial security should always be the first objective. Without financial security, what good does it do to have a nice house, drive a flashy car, and dream of the day you can retire and live off your 401(K) contributions? If your financial security remains elusive, all of these things can disappear rapidly, leaving you broke or even worse, in debt.

Pay Yourself First

Most people are living paycheck to paycheck. They work all month to pay everyone else. This gives them no real control of their financial future, while also leaving them unprepared for emergencies. Before paying any bills, transfer money to your savings account.

Experts recommend saving 10 percent of every paycheck and having at least 6 months’ worth of your minimum living expenses and debt payments in cash equivalents. If your budget is too tight, look for ways to trim expenses until you can squeeze out the 10 percent you need.

Get an Accounting Pro at Tax Time

Most people who file on their own miss deductions, not to mention all the time lost fiddling with tax returns. For instance, accounting services get you the max return or minimum payment and ensure you remain audit-free.

Accountants can also help you organize other financial matters, such as investments and personal expenditures. You always end up with more money at the end of the year when you use an accountant.

Say No to Debt

Unless the debt you are taking on funds something that benefits you in the long term, say no. While you may decide it’s worth it to borrow for buying a house or funding an education, buying clothes, going on vacations, eating out, etc.

These things should be paid for only in cash. This not only saves interest, it gives you the impetus to build up your savings account.

Invest in Yourself

Now that you have a handle on how to get free of the paycheck-to-paycheck trap, consider the future. Are you in a job and industry you feel provides enough security to make investing in an education or home worthwhile? Or are you always nervous about whether you’ll still have a job at the end of the month or year?

Also, are you comfortable and happy to the point you know you won’t feel burned out down the line? The bottom line: if you can’t see your current situation remaining secure, start planning for a career change. For long-term financial security, you need to know your income is safe.

While there is no one formula for financial security, largely because the definition of financial security differs from one household to the next, there are a group of principles most people recognize as helpful to all people in achieving their definition of financial security.

Some of the most universal and practical suggestions have been illustrated in Kiplinger. The following four principles can be applied by anyone right now.

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