It seems like every time you turn around, you're bombarded with information on staying healthy: what to eat, how much to exercise, what vitamins to take, and how much water to drink. Most people try their best to incorporate at least some of this advice into their daily routine because they know that taking preventive measures now means less chance of serious health problems down the road. The same is true with financial health. Spending some time now going over your money situation can go a long way toward avoiding problems or surprises later. As with any fitness program, taking the first step can be the hardest part of the process.
Once you have a general idea of how you would like your financial future to unfold, you can get into the specifics of how you will reach your goals. The questions below, provided by the American Bankers Association, provide food for thought as you get into the process of figuring out how to make your financial dreams a reality.
* How much money do you have? Create a balance sheet showing assets and liabilities. You may be pleasantly surprised, or you may discover that you need to manage your money more effectively. * What kinds of services do you use at your bank? Are there better options than those you are currently employing? For instance, if you have money in a savings account that you know you won't need in the near future, consider converting it into a certificate of deposit (CD). You will get a higher interest rate, and you will be less tempted to tap into the money.
* What is your mortgage rate? Should you consider refinancing? Mortgage rates have been at a record low for the past year. Even though there are costs associated with refinancing, it may be to your advantage, since it is likely you'll be able to reduce your monthly payments and save on interest. If you don't want to refinance, consider making additional payments on your mortgage to draw down the lifetime cost of the loan.
* Do you carry a balance on your credit card? Are you only paying the minimum amount due each month? If so, don't ignore this warning sign of credit trouble. If you pay the minimum balance month after month, make payments late or use cash-advances to pay daily living expenses, you might be in the "credit" danger zone.
* How much do you have in long-term savings? Have you calculated how much you need to save annually in order to retire comfortably? Saving for your retirement should be a priority - and the earlier you start, the better. If your employer offers a 401k or other savings plan, take advantage of it. And talk with your banker about other ways to save for your retirement.
* Although most of us don't like to admit that we're not going to live forever, you need to think about trust or estate planning. Your banker can help you ensure that your money will be passed on to your heirs in the most advantageous manner.
Don't wait until it's too late. Prevention and planning are the keys to a secure financial future.
For more personal finance tips, visit www.aba.com and click on "Consumer Connection."
Courtesy of ARA Content
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