1. Track What You Spend. Many of us are completely unaware of what we spend each day and on what. Those Starbucks coffee runs add up and it could mean a financial hit down the road. Start a money journal and keep track of all your expenses for a month. Break your expenses into categories, you may see that you are spending far more money on things than you realized. Tracking your spending is the first step in establishing a budget that will lead you towards your financial goals.
2. Budget, Budget, Budget. Figure out what your take home is each month, set aside money for your fixed costs such as home mortgage, car payments and utilities, next set aside money that you will have removed from your paycheck and placed in your company’s 401(k) savings plan. This forced savings method will help you prepare for your retirement and take away the temptation to spend the money. It is never too early to save for your retirement and you should start doing so as soon as the option is available to you.
3. Pay Your Bills in a Timely Manner. Paying your bills on time is an important part of financial planning; it saves late charges, higher interest rates and other penalties as well as protects your credit score from damage. This cannot be emphasized enough, you need to know and understand your credit score. It is important to monitor it and ensure that your good credit is not being negatively impacted. If your credit is in need of repair, begin to fix it immediately. Your credit score enable you not only to get loans for housing or car purchases but also to get the best rates on these loans, a key way to save money.
4. Pay Down Your Debt. Like so many people, your debts may have snowballed, you may be paying the minimum each month and feel like you’re getting nowhere fast in terms of paying them off. A debt consolidation loan might be the answer for you, especially if you have a lot of high interest credit card debt. If your debt is still manageable, start by paying off the smallest debts first, closing out those accounts will help give you a feeling of accomplishment and encourage you to continue paying the debts off.
5. Save for Yourself First. We all want the best for our kids, our elderly parents and other people in our lives. You will be of no help to them, if you haven’t taken care of yourself first. Rather than saving for your children’s college education, save for your retirement first! This concept is one that is hard for many parents; it goes against our natural tendencies to provide for our children. However, ending up destitute and living off your children in your old age isn’t doing them any favors either. Your children have a lifetime to pay off their education debts; you have a finite time to save for your retirement.