If you’re like many people keeping track of your personal finances is probably not at the top of your ‘to do’ list. It should be however as it’s the only way that you’ll ever be able to put aside enough money for savings, an emergency fund and your retirement. With that in mind we put together will a list of 10 excellent tips that will help you to manage your personal finances and to achieve any savings and retirement goals that you may have. Enjoy.
1. Start tracking your monthly spending. Very few people know exactly how much they spend every month on their food, entertainment, housing costs and other expenses. No matter what you’re paying with, either cash, credit card or debit card, in order to get a better picture of what you’re spending each month you’re going to need to keep track of your expenditures and total them up at the end of the month.
2. Create a budget that you can use. Once you’ve got the numbers from all of your monthly receipts you’ll want to create a budget that’s realistic and easy to follow. This budget will let you track the amount of money that’s coming in and going out and help you to determine where cutbacks to expenses can be made.
3. Budget for your savings. It is estimated that over 45% of Americans have no savings whatsoever. This is a very delicate and risky situation as, when unforeseen emergencies or expenses come up, there won’t be any money put aside to pay for them. It’s for that reason that you should budget part of your paycheck for direct deposit into a savings account. Experts say that at least a 10% of each check should be put aside and, if you can, even more.
4. Always pay all of your bills on time. This is vital to any financial plan. Paying bills late will not only cost you money in late fees but also damage your credit score, something that may hinder you the next time you need to apply for credit. One of the best ways to make sure that you don’t pay bills late is to simply pay them as soon as they arrive.
5. Don’t forget your credit report. Once a year you can get a free copy of your credit report from the ‘Big 3’ reporting agencies, Experian, Trans Union and Equifax. Once you get them you should check them thoroughly for accuracy and, if there are any errors, dispute them right away in writing.
6. Find out what your credit score is. You can opt to purchase your credit score from the big three credit reporting agencies and find out exactly where you stand. Scores range between 300 and 850 and the higher the number is, the better chance that you’ll be able to get the credit you need when you need it.
7. Cut down on you use credit cards. Simply put, if you are using credit cards and piling up debt faster than you can afford to pay it off, you’re headed for trouble. If you’re already at the point where you’re deep in debt, your best bet may be to cut up your credit cards until you’re able to pay down that debt. Some debt, like a mortgage, helps your financial situation but, in almost all situations, high credit card debt will not.
8. Take advantage of your employers matching contributions. Many people have the opportunity to basically get free money simply by putting money into their 401(k) and letting their employer match it. The best thing that you can do is to put the maximum amount of money into your 401(k) that your employer will match and don’t leave any free money on the table.
9. Reassess your insurance policies annually. One of the most important tools that you have to protect yourself against financial hardship is insurance. Your insurance premiums should be at the top of your monthly payment list and, at least once a year, you should review them and make sure that not only your coverage is sufficient but the price you’re paying for it is competitive.
10. Use an FDIC insured bank or other financial institution. Many people make the mistake of putting their money into non-traditional banks or financial institutions that aren’t insured by the FDIC. That’s a risky financial move and not recommended.
We hope that you found these 10 tips useful and helpful and that they have given you some food for thought about how to gain mastery of your financial situation. If you have any questions or need any help with your finances please let us know. We’ll take a look at any questions or concerns that you have and get back to you with some answers ASAP.