Today’s economic landscape can make achieving financial stability feel like a pipedream. It’s challenging and without the right strategy, it can feel almost impossible. In fact, without proper planning, you can go from being financially sound to teetering on the edge of financial ruin in the blink of an eye. That’s why it’s so important to create a personal finance strategy that works for you and your current income flow.
Create a Budget
This tip is the oldest one in the book, however, it’s also the wisest. Creating a budget that you follow can help you save money. You need to know where your money is going and how much is being spent on things you probably don’t need. Keep in mind that budgeting isn’t always easy; sometimes there just isn’t enough money to cover everything. By itemizing your bills and really knowing how where your hours each month, you’ll be able to tweak your spending.
Build Credit
Not having credit can be as damaging as having too much of it. Credit invisible adults often have a harder time being approved for loans, renting an apartment, and buying a car. If you fall into this category, you can review your options to get a better idea of how you can improve your credit worthiness overall. Even paying one credit card on time builds a positive credit history.
Invest Wisely
With so much economic uncertainty, the last thing you need is to lose money on your investments. All investments are not the same, so you need to understand which ones carry a higher risk and which ones offer a higher return. High-interest savings accounts give you more bang for your invested bucks, so choose one that will grow with you. You can even see if your credit card issuer offers these types of accounts.
Open an Emergency Fund
We already know how unpredictable life can be, so understanding the benefits of building an emergency fund is a must. Experts suggest having at least three to six months of expenses in an account only used for emergencies. This account is separate from your savings account and should never be combined. Don’t worry if you don’t worry if you don’t have three months’ worth of expenses to open it. Just add as much as you can each month without dipping into your savings account.
Reduce Your Debt
Although it’s probably easier said than done, you also need to find ways to reduce your overall debt burden. Look at your expenses and see which debt is draining your bank account. High-interest credit cards are a major cause of debt, so if you have any, contact your card issuer and see if you’re eligible for a lower rate. In addition, you can implement a pay-off plan and tackle the largest debt first. Alternatively, you can pay off the smallest debt first and gradually work your way on to the next largest one.
Review Your Insurance Coverage
Insurance coverage costs are subject to change, simply based on the economy, your financial status and life changes. Make it a point to routinely to review your insurance coverages and see if there is any way you can reduce the cost. Getting married or divorced, or having a baby can change your insurance rates. Be sure to take advantage of any discounts you can pertaining to these life changes. You should also try to bundle insurance coverage where you can. Most insurance companies offer discounts for customers who do.
Avoid Impulse Spending
Buying the first thing that catches your eye might sound innocent enough, but it can also lead to financial difficulties down the road. Impulse spending, especially when you’re on a tight budget, can cause you to overdraw your bank account, miss loan or credit card payments, and even cause you to be short on rent or your mortgage payment. The best way to avoid impulse spending is by taking time to think before you buy. Ask yourself if you really need the item to determine whether you have an actual need for it. In many cases, you’ll probably decide that it’s better to wait until you have the extra money to buy it or at least wait until it goes on sale.
Become a Handyman
Besides high-interest credit cards, paying for home or car repairs that you can do on your own can also drain your account. Many home repairs don’t require the help of a professional. These include unclogging a drain or toilet, cleaning your gutters, and repairing a torn window screen. The same holds true for your car. Instead of paying someone to change your oil, you can learn how to do it yourself.
Keep an Eye on Subscriptions
If there’s one thing that eats away at your budget, it’s having an abundance of subscription-based services. There are subscriptions you can have such as Amazon Prime, TV steaming like Netflix, and even Spotify. Having one or two won’t impact much, but you’d be very surprised to know how many people get all these subscriptions and forget about them. A surefire way to find out what subscriptions are draining your savings is to thoroughly assess your bank statements. It’s recommended that you go over the entire year rather than just a few months. This is meant to give insight into everything you’re paying for. Once you find something that shouldn’t be there or don’t recognize, you can cut it out. By getting rid of forgotten and unused subscriptions, you can save hundreds each month.
Learn How to Cook and Can Your Own Food
Eating at restaurants is something everyone looks forward to every so often. However, constantly going to these places can make it difficult to sustain your budget. What’s more is that people eat out for almost anything ranging from coffee drinks to whole entrees for breakfast, lunch, and dinner. What you get at a restaurant can not only be made at home, but you’ll also have double, if not triple, the portions.
