By the end of the current 2022, I want to pay off my bad credit and also invest in other loans that I have; for this, I need a capital of about 3000 US$. I make monthly payments to pay off the loan so that the total final amount may change.
Current position
Having defined goals, before moving on to drawing up a plan, it is essential to understand what financial position I am in and what is happening with my financial life today. To do this, look at what was set in the goals and draw parallels with what is in my life now. I am 19 years old, working and earning between $300 and $350 per month as I plan my financial project. At the moment, I do not have accumulated capital that I could use to repay the loan. During the summer, I will work two jobs, so my income will increase, and I will be able to save up for the full repayment of bad credit.
Cost planning
General expenses include food, household supplies, communications (mobile and Internet), clothing, and loan payments.
Financial stability
Just as one should take into account unexpected expenses, one should set aside for an unforeseen event. The reserve fund is designed to protect a person from life’s surprises (Ahmad et al. 195). If a person can face any crisis situations, such as job loss, the need to move, or a global crisis, then a reserve fund should be created. Similar to a financial safety net, a reserve fund will help a person protect himself from unforeseen situations that prevent him from achieving his goal. Generally, the fund should include general expenses, ideally for up to six months, but variable expenses such as entertainment can also be included. In general, one should save as much time as possible to ensure that enough funds are available to help one get back on track.
Outcome
Budget savings start with cost analysis. First, one needs to find the most costly destinations; for example, the most significant spending is on food and communications. Therefore, one should review a monthly spending plan for these destinations and, for example, reduce visiting cafes and restaurants or change the provider in order to switch to a more profitable one.
Retirement
After creating a financial plan, optimizing it, and considering the financial safety net with a reserve fund, saving from a longer-term planning perspective becomes possible. One of the most common long-term goals is saving for retirement. Even though it may seem like a long way, it is best to save up for it as early as possible. A person will be able to benefit significantly if he starts saving for retirement as early as possible. It will account for the compound interest of many retirement savings accounts. Compound interest occurs when the interest accumulated on savings begins to pay interest. Considering the minimum pension amount, which is about $ 1,500, I should calculate the necessary additional income. Currently, this is 4,800 – 1,500 = 3,300, which should be multiplied by 20 (approximate retirement period), so I should have saved $ 66,000 by retiring.
Work Cited
Ahmad, Fahd A., et al. “An Assessment of Residents’ and Fellows’ Personal Finance Literacy: An Unmet Medical Education Need.” International Journal of Medical Education, vol. 8, 2017, pp. 192–204., Web.