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Tonight, I have the honor of introducing an article by My Money Blogs first guest-poster, Alban. Please visit his website at the following link to read more of his articles!  Home Loan Finder. To become a guest poster on My Money Blog, simply email me at the address in the Contact Me section.

5 Essential Financial Products Most People Need

As you go through life, your financial needs will change, but there are five important financial products that most people will need at some point. As a result, it is important that you know why you need each of these products, and that you know how best to use them to make the most of your finances no matter what stage of life you are in right now.

1. Savings

A savings account is something you can have from the time you start school and a good savings plan will make it easier to achieve every important milestone in your life from a new bike to a new house. With the best savings account you can:

• Live within your means by saving for purchases and avoiding credit 

Spending less than you make seems like a simple plan to follow, but for most people credit is so readily available that it is just as easy to make purchases which don’t fit within the budget with the intention to repay them later. Unfortunately it is also easy to forget about putting the extra amount from next week’s wage onto your credit card when you can roll over your balance for the next month and the next. However if you get into the habit of saving for your purchases then you won’t have to worry about accumulating bad debt or rising interest and without crippling credit card debt you’ll more easily be able to preserve your credit rating, apply for a home loan, or simply enjoy the freedom of not owing anyone anything.

• Plan for emergencies

2. Credit Card

You may have heard a credit card referred to as a necessary evil and while a credit card isn’t always necessary and it doesn’t have to be evil, it does make sense to have a credit card at certain times in your life:

• You can build a responsible credit history

3. Term Deposit

A term deposit account was typically for large, long term investments, but you don’t have to wait until you have the corner office or the company partnership to start investing in a term deposit because just about anyone can enjoy a secure, guaranteed savings account. A term deposit account allows you to:

• Save for long term plans without having to manage your savings 

4. Home Loan

Another necessary evil, since most of us would be saving our whole lives to accumulate enough to buy a house, and just as few are lucky enough to borrow or be given enough to buy our first home. Instead, we need a home loan, however a mortgage is much more than just another monthly bill if you know how to use it:

• Borrowing money for your house and leave your savings free to live 

You are going to have a home loan for a substantial portion of your life, so you want to make sure it is working for you. Therefore, consider the features you could benefit from, such as an offset savings account where the funds in your savings account reduce the interest you pay, a payment holiday option where you can pause your payments when you have kids and less spare cash, or a redraw facility where you can pay extra into your home loan each month, but have the option to redraw it if you need it.

5. Retirement Plan

This is the point that all your other financial products have been working towards; a time of your life when you are free from work commitments and so you also want to be free from financial commitments too. You have worked hard to get to your retirement, so make sure it works hard or you:

• The pension is increasing but you want to live the best you can 

Since you’ve worked hard for the majority of your life, you want to be able to enjoy your retirement in the comfort and style you’ve always dreamed of. This is why you need a solid retirement plan so that you really can rest and enjoy your golden years.

• Plan your retirement budget

Be clear about the type of retirement you want to have and you will be better able to map out a financial plan, and pinpoint the financial product you need. Whether you want to live six months of the year overseas or you want to buy a bigger house so your family can stay with you when they visit, if you make a budget for the life you want to live, you will be able to work out how much you need to make that dream a reality in the future.

• The future can be an expensive place

This means your retirement plan needs to not only meet the budget for the life you want to live, but also needs to grow at a rate which stays ahead of inflation costs. If you work out your retirement budget now, the amount your plans will cost in 30 years when you retire will be much greater.

Planning your future and the financial products doesn’t have to be difficult, and if you take the time to map your needs, and match them with these five essential financial products, the future may be more expensive – but you’ll be prepared.

Thanks for reading.

Alban is a personal finance writer. He provides budgeting and personal finance tips and helps people to find the best home loan online.

If you are interested in becoming a guest poster on My Money Blog, please email me at irwin.jacob@gmail.com.

Keep on learning!

Jacob

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