Roadmap to Financial Security – Guide to Saving

Note to self – ‘Money does not grow on trees’. It is the one thing I’m sure most, if not all of us, has heard at some point in our lives.

 Knowing how to secure your financial well-being is one of the most important things you will ever need in life. No matter how much or little money you have, the important thing is to educate yourself about your opportunities. No one can guarantee that you’ll make money from investments. But if you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your money.

 Some people inherit wealth, or experience success in a business venture, but for many others the only way to ensure financial stability is to save and invest wisely for your future.

 There are three basic steps to follow to start securing your future – develop a financial plan, pay off any debt you may have incurred and start saving and investing as soon as you pay off your debt.

 The Financial Plan

Make a list of what’s most important to you, in order of priority. Identify a time frame for when you would like to achieve these goals. This is necessary as you need to find an investment tool that best meets your timeline. There are many tools that can help you put together your financial plan, visit www.investucatett.com for more information.

 Pay off your Debt

You also need to ensure that you know your current financial situation. Take an honest, realistic, look at your finances. Document what you owe and what you own. Your liabilities include all your debts – outstanding credit card payments, loans, mortgage etc. What you own will be your savings, cash, chequing accounts, real estate, other investments, and even the cash value of your life insurance.

 Now subtract your liabilities from your assets or what you own. Once you get a positive figure, you have a good standing. If you have a negative figure, then you have some work to do to reduce and eventually eliminate your debt. This is called your net worth statement.

 Credit cards can make it seem easy to buy expensive things when you don’t have the cash in your pocket—or in the bank. But credit cards aren’t free money. Attached to credit cards are high interest rates if you don’t pay off your balance in full each month. If you owe money on your credit card the wisest thing to do is to pay off the card as soon as possible. To avoid credit card debt you can adopt the following practices:

• Don’t use a credit card unless your debt is at a manageable level and you know you’ll have the money to pay the bill when it arrives
• Always keep abreast of what you have owing on the credit card. Keep track of your credit card spending so you can pay what’s required at the end of the month.
• If you have more than one credit card pay off the one with the highest interest rate first. Pay as much as you can toward the debt each month until it is paid off.

 Start Saving

Before you start saving ensure you know how much money is coming in and going out. You can do this for yourself or for your entire family. Then adopt a financial rule of thumb, ‘ensure you pay yourself and/or your family first’.  Put aside a portion of your income towards saving whether it is through a standing order or automated bank transaction, or via a physical removal of money from your account into savings. Once there are automatic deductions from your paycheck or bank account, you will increase your chances of being able to stick to your plan and realise your goals.

 If however you find that you are spending and you don’t have enough to put aside for savings, consider what expenses, or luxuries in some cases, you can cut back on to save a few dollars. A major and easy way to save money is to prepare your breakfast and lunch from home, instead of having to purchase every day. It will be easy on your wallet and on your waistline too.  The truth is, small savings add up to big savings over time and every effort to secure you and your family’s hard earned money should be encouraged.

 The Trinidad and Tobago Securities and Exchange Commission is not an investment advisor nor is it a brokerage house. This article is intended solely to provide you with the information you need to make sound investment decisions and to ensure that you are familiar with and understand your rights and responsibilities as a consumer of financial services.

 Before investing, educate and empower yourself!

To learn more, visit www.investucatett.com follow us on Facebook or call 624 2991. If you have any questions or comments feel free to email us at ccei@ttsec.org.tt .