If you could write the story of the rest of your life, what would that story be like? Would you have a bright financial future?
By now you know it’s impossible to predict what will happen in your life. But you can influence it. The things you do today have a profound impact on the life you live tomorrow.
It’s easy to think your financial future depends on factors outside your control. And to some extent, it does. But you have a surprising amount of say in the kind of financial life you live 10, 20 or 30 years from now.
For some context on this idea, let’s take a look at something the Bible says in Proverbs 21:20 —
The wise store up choice food and olive oil,
but fools gulp theirs down.
This proverb is all about preparation. Wise people, it says, make preparations for a prosperous future by storing things up. Foolish people, on the other hand, consume everything they have as soon as they get it, leaving them nothing to enjoy later on.
The application to your money is straightforward: If you spend everything you earn, you’ll never be able to enjoy a better life. But if you get in the habit of making small sacrifices now to prepare for the life you want to live later, you can count on having a bright financial future.
In the modern world, the best way to do this is through saving and investing. If you have paid off your debt and created a solid safety net for emergencies, you should turn your attention toward the future you want to build.
There are three main areas of life that you should set money aside for. We’re going to walk through each of them in this article.
Building a bright financial future requires thinking carefully about the story you want to write, the taking intentional steps toward making that story a reality. Here are three financial decisions you can make now that will move you in that direction.
1) Fund your own retirement.
You may enjoy your work, but chances are you won’t want to work forever. Someday you’ll want to spend more time pursuing your hobbies, playing with grandkids or even just sleeping in. But you’ll only be able to do those things if you can afford to retire.
Everyone’s retirement situation is different. Depending on where you live, you may be entitled to social security or a government pension program that will provide retirement funds, but you shouldn’t count on those programs to pay all your expenses. To really enjoy retirement, you’ll need to begin investing some money long in advance.
You may also have a pension plan at work. More likely, though, is that your employer provides a retirement account and matches some amount of what you withhold from your paycheck for those investments. If that’s the case, you should take advantage of that program and make sure to withhold enough to get the full match. After all, you’ve earned it, and it will go a long way to funding a bright financial future.
You should also consider additional investment beyond your company’s basic retirement plan. The best way to do this is to work with a trusted financial planner who can walk you through the details.
2) Fund your children’s education.
If you’re a parent, your plans for the future don’t just involve your life — they involve your kids too. And one of the best investments you can make in their future is to pay for a great education.
Maybe you live in a country where post-secondary education is free. If so, that’s great. But in the United States, families are on the hook for paying for their students’ education. Those expenses can be sky-high, and they continue to rise quickly.
Many families fund the cost of this education by having their young adults take out student loans that can run well over $100,000. But this sets these students up for a lifetime of debt — the opposite of a bright financial future.
Don’t set your kids up to start their adult lives in debt. Begin saving money now to pay for their education later. A financial advisor can help you put together an investment plan to make this possible.
3) Fund your family’s dreams.
Retirement and college are part of many family’s aspirations for the future. But they may not be all you’re dreaming about.
If you have other dreams in your heart, such as starting a business, launching a nonprofit or even taking a once-in-a-lifetime vacation, you should pursue them. But here’s the hard reality: Most big dreams die due to lack of funding.
The things you’re dreaming of can absolutely be part of your financial future. But to get there, you have to start preparing for them now. Get in the habit of saving money so that one day you’ll have enough cash in the bank to pursue that dream with confidence.
Like any good story, your life will involve some plot twists you didn’t see coming. But if you commit yourself to making wise preparations now, you can write a happy ending.