How to Plan Your Finances at 50 With Three Easy Techniques!

If you’ve just turned 50 and are starting to get worried about your golden years in the financial sense, then you came to the right place!

They say that the pre-golden years of life are the best, and midlife is the perfect time to start enjoying life with all the knowledge and wisdom gained over the decades. However, as you must already know, all that cannot be possible unless you’re mentally settled and have that satisfying sense of financial security.

Here’s the good news: it’s not too late to begin planning your finances at 50. You might even find it easier planning at your current age than you’d ever thought before. All you need to do is:

Know your financial health

It doesn’t make sense to plan your finances if you have little or nothing to work with. While you may have a decent pot of pension savings, the money may not be enough to meet your regular expenses or finance your anticipated additional expenses in the future.

So, what do you do?

Step 1: Do you have any investments? Understand the performance.

If you have an investment portfolio, you can also track its growth to see whether you need to make any changes. This dividend yield calculator will help you do that easily. Knowing the current and future performance of your investments is a critical step in determining your financial health.

Step 2: Determine your net worth and debt to income ratio.

Net worth is the simplest way to understand your financial position and is fairly simple to determine. All you need to do is take the overall value of your assets and subtract all your liabilities.

This is pretty simple because there are apps online that would readily help you with that. In a typical app, all you need to do is write down all you consider an asset in your life. Investments, cash, and your home are some of the items you’ll include, and then subtract all your debts including mortgage and credit card debt.

The next step involves calculating your debt-to-income ratio. Simply divide the total amount you pay in debt each month by your monthly gross income. If the ratio is above 30 percent or lower, then you’re safe.

It’s okay if you get a negative or low net worth or a higher debt to ratio figure. The next step below will help you out.

Boost your income with high dividend yield investments

The next step is to make sure you boost your financial health with the most appropriate strategies. In that case, you have two excellent options:

• High yield dividend individual stocks
• Index funds

The first option is quite straightforward. It simply involves selecting companies that have a higher dividend yield. High yield dividend stocks are great options because they provide regular earnings, and they’re less susceptible to rough economic cycles.

Here is a short list for you to help you get started. It shows the stocks with the highest dividend yield at the moment:

• Target
• Gilead Sciences
• Clorox
• Johnson & Johnson
• Costco

The next step is to diversify with index funds

Index funds are stock portfolios that mimic the performance and composition of a financial market index like the SPDR S&P 500 ETF Trust. Index funds have for years proven themselves great investments for middle-aged adults because of their nature of being broadly diversified, their solid returns as well as low costs. However, since not all index funds are created equal, you need to consider starting with the most lucrative ones listed below:

• Fidelity ZERO Large Cap Index
• SPDR S&P 500 ETF Trust
• Schwab S&P 500 Index Fund
• Vanguard S&P 500 ETF
• iShares Core S&P 500 ETF

Increase your savings

Most people’s earning capacity is often at its peak in their 50s. This is the time when you need to channel all your extra cash to contribute to your retirement plan. Here are two steps to help you out.

• Boost your share for your Roth savings to maximize your tax-advantaged retirement savings.
• Say goodbye to spending your bonus on petty things and save all the cash.

Bottom line

At 50, your financial plan should be very simple. All you need to do is be in touch with your financial health, increase income with high yield dividend stocks and index funds, and increase your savings as much as possible.

Jaylin is a Staff Writer for Bizmaa focusing on business analytics, business systems, gadgets and other small business news. She has a background in information and communications technology coordination.