Managing your personal finances is one of the most important keys to success. When people neglect their financial lives, they are likely to make mistakes that can damage their credit and perhaps even force them into bankruptcy. This is especially important if you need to put a child through college. Rusty Tweed offers these simple tips to help parents and students keep their financial goals in mind.
Make a Budget and Stick to It
The top tip on this list is making a solid budget and adhering to it. Lay out your financial paperwork and draw up a list of the money that you receive each month and the ways you spend it. Make a spreadsheet with all of the categories where you spend money. You may find that there are areas where you can trim your budget, including entertainment, dining out, and shopping.
When you have a complete picture of your financial life, set a budget for each category. Include savings in this budget, and you can watch your net worth rise each month. Your overall goal should be to spend less than you earn.
There are several useful mobile apps on the market that can help you solidify your budget and keep track of your money. These apps can help you get and stay organized.
Pay your Bills on Time
This may seem like a no-brainer, but too many people fall into the trap of late payments. Late fees and interest on balances left on credit cards are a needless drain on your finances. Make sure that your bills are paid on time, and you’ll keep more of your money while preserving your credit rating.
Automate your Savings
It’s a great idea to set up automatic savings in your checking account. Choose a set amount to save from each paycheck. Ideally, everyone should have six months of expenses saved in case of financial misfortune. This can be a difficult bar to reach, but every little bit helps.
Keep Track of your Credit Report
You may not want to keep close tabs on your credit report, but it’s vital to good financial health. Checking your credit report every four months will help you avoid problems. You will be able to catch any fraudulent additions or errors on your account as well as determining what you can do to raise your credit score.
Check your Credit Card Bills Carefully
Scanning your credit card bills each month and making a note of any fraudulent charges can be a huge help in getting your financial life in order. You may be able to save yourself money in the case of overcharges. It is also a good way to keep a handle on your spending in various categories, fitting in with the need to make a personal budget.
Watch Out for Impulse Purchases
When you are shopping or browsing online, it’s tempting to make impulse buys. These can be a drain on your budget. It’s wise to make a 24-hour rule for yourself on new purchases. Wait 24 hours, and if you still need the product, go ahead and buy it. You may find that you don’t need it and that you would be better off spending the money elsewhere or putting it into savings.
Save for Retirement
The best age to start saving for retirement is when you first enter the workforce. When your money has thirty to forty years to work for you, you’ll be more likely to be financially solvent well into old age. It’s never too late to start investing for retirement. When you have several decades to play with, you can make higher-risk investments like stocks. As you near retirement age, put more money into bonds and other low-risk investments.
Make sure that you contribute the maximum amount to your 401K, especially if your employer matches your contributions. It’s also smart to plan for your retirement before considering college savings for your children.
These financial tips from Rusty Tweed will help you get your money in order. Budgeting and planning are crucial in building a solid financial future, as are avoiding unnecessary expenses. When you take the time to plan your financial life, you will be able to weather financial storms much more easily.