Staying on top of your finances takes self-discipline and commitment. Although it’s much easier to avoid checking your bank account statement and continue spending when needed, it won’t help you get your finances in order. You’ll need to track every penny you spend and look at your bank account on a regular basis to ensure everything is correct.
When you know you want to be better with money but aren’t sure where to start, it’s time to look into financial planning. The financial planning guide below offers tips for staying on top of your personal finances that could help you right now. Continue reading to learn more!
Create a Budget
Before you create a budget for yourself, you must know how much income you have versus expenses. Take a few minutes to sit down and write everything out. How much money are you left with each month after paying all your expenses?
Take this information to then set goals with. For example, if you have $200 leftover each month after all expenses, how can you then budget that money and set realistic goals. Can you set $50 into a savings account?
Can $10 go towards an extra payment for paying off your highest debt? What do your long-term and short-term financial goals look like? what small steps will you need to take to ensure you get there?
This is all part of creating a budget and setting goals.
Start Paying Off Debt
Now it’s time to start paying off any debt you have. After conducting a credit damage assessment, you can then start building your credit by paying your debt off one by one. Take a look at your debt and write them down in order from the highest interest rate to the lowest.
Although all debt needs to be paid back on the due date, it’s a good idea to place any extra money you have towards the debt with the highest interest. Even if it’s only $10 (as mentioned before), it’ll help.
Open an Emergency Savings Account
You want to have a regular savings account and an emergency savings account. Here’s the difference. You won’t touch the money in your emergency fund unless there’s a major emergency of some kind.
For example, if you’re in an accident and now have hospital bills, then you can take money out of your emergency savings if needed. Emergency cash is a great cushion to have on top of a regular savings account.
Build a Retirement Plan
If your job doesn’t offer you a retirement plan such as a 401K, then you’ll want to build a retirement plan of your own. There are several different options for you, including a CD (certificate of deposit) and an IRA (individual retirement account).
Speak with your bank about all your options and which one might be the best for you.
Review Spending Habits
Bad spending habits can ruin personal finances. Review your own spending habits to see where you might be spending money unnecessarily. Make cuts where possible.
For example, if you’re in debt and it’s affecting your credit but you also pay for cable, then that’s a luxury expense you can cut. Consider canceling your cable service for now until you’re out of debt. The same is true for eating out or spending money on unnecessary items.
Financial Planning Starts Here
Use all of the helpful information listed above to help you begin financial planning. If some of these tips are unrealistic for you due to money, then remember to make spending cuts and possibly pick up a side hustle or part-time job if needed until you’re back on your feet again.
If you’re interested in more articles similar to this one, then don’t forget to continue visiting on a regular basis.