Sometimes we think we are plugging along and in good shape when it comes to not only our finances, but also saving for the future, but the truth is, we could all use a little improvement. Personal financial management is an ongoing way of life, constantly changing and adjusting as you go along. You never know when you get hit with extra expenses, or a life changing event comes to you that you need to be prepared for as best you can. Whether you are looking to tweak your financial planning, or are even starting now for the first time, it is never too late to make smart money moves that you can start right now.
Build Up an Emergency Fund
As I mentioned, you never know what life will throw at you, so it is good to be prepared the most that you can. Experts have said that it is good to have three to six months’ worth of expenses in an accessible account in case of an emergency, although some say anything over three months can be too much to sit in an account without growing, so you may have to see what works. Whether there is an unexpected auto repair that is needed, an update to the house that is overdue, or an unfortunate job loss that occurs, it is good to have available cash so you don’t have to put on a credit card and go into debt.
Pay Off Debt
Being in debt is never a good thing, and neither is paying interest on what you have spent. Credit cards are a great thing when it comes to being able to pay off the balance on the next month’s statement, provide protection against fraud, and provide rewards on the purchases you make, but if you are unable to pay the full balance when it is due, you will start to be paying on interest, that depending on your balance could take years to pay off, while you are being charged 15% APR.
Maximize Retirement Savings
I know that retirement is not the most important thought on your mind right now whether you are just out of college or even have decades left until you hope to retire, but it will come soon enough and you want to make sure you have plenty of money to live out and enjoy your golden years. With the life expectancy continuing to rise, if you retire say at 65, you need to have 20 years’ worth of funds to live off of, and while we can’t be sure social security will be available, we need to save everything we can early on so that it will grow into a nest egg for retirement.
Budget Your Money
Two-thirds of Americans do not have an effective budget, so whether that means one was tried at one point, or never at all, it is kind of scary that we are throwing money around. Sure, you may keep track of your finances, but if you can look to allocating money to go to certain areas, that could help free up extra money by honing in spending in other areas. Whether it is a spreadsheet or a phone app, budgeting your finances could be a help going forward.
Reduce Unnecessary Spending
As you continue to look at your spending, in order to free up any extra money to pay off debt or save for the future would be to reduce any unnecessary purchases. If you take last month’s bank or credit card statement and go line by line you will probably be surprised at how much you spent that probably could have been avoided. Something we are all guilty of, take a look at how many times you at out, whether it was for coffee in the morning, lunch, or dinner, if you could go grocery shopping and plan your meals out at home, you can save a significant amount each month.
Make a Few Adjustments
No one said that taking care of your personal finance would be easy, probably why so many are in credit card debt and don’t have much saved up for the future. If you can make a few adjustments now, the earlier the better, it will be the most beneficial to you and by reducing spending and increasing savings, you will start to see that retirement account start to jump and you can look forward to have plenty to life off when you can finally leave work behind you and live out life to its fullest.