Dealing with finance can be tricky, whether we are discussing your personal finances or referring to a business. There is a lot to consider, but if you stick with it, you will find that handling and managing your finances does not have to be as difficult as it first appears. You should always set goals and try to stick to them as closely as possible; but at the same time, if you miss a goal, do not let that deter you from getting back on track. If you are looking for ways to improve your finances, then look over these top 5 financial tips.
5 – Spend Less Than You Earn
This first tip should be obvious; however, it is easy to end up spending more than you are taking in, especially when you factor in credit cards and loans. Pay attention to your after tax earnings each month. After paying bills and dealing with expenses, you should still have something left over to rollover into a savings account or to use towards paying down past debt. You do not have to create a detailed, item by item budget, but you should remain aware of how much you are taking in and how much you are spending.
Create a general list, adding up your monthly bills, without including your minimum credit card statements. Then add your expenses, such as food, entertainment, and clothing. Do not short yourself when adding expenses, be realistic and include a fair amount for how much you think you may spend each month on expenses. The amount left over, after taking expenses and bills away from your earnings, is your buffer. You will use this in the next step.
4 – Start Paying Off Debt
If you are able to sticking to your budget, you should have a buffer that can be used to pay off past debt. This is the reason that your minimum credit card payments are not included in your budget. Now it is time to total the minimum payments.
If you have delinquent payments that have been passed off to a collection agency, begin using your remaining buffer to pay those off one at a time. Once delinquent bills are taken care of, use the extra buffer money to begin paying off your credit card with the smallest limit. You are slowly working your way up the chain of credit cards, starting with the most manageable. By paying more than the minimum payment, you will end up spending less in the long run.
3 – Start Saving Money
The next way to get your finances in order, after clearing all your credit cards and past debts, is to start adding towards a savings account. You should set a goal, and try to include as large of a portion of your buffer money towards savings as possible. Ultimately, you will want to have an amount in your savings account equal to at least 6 months of your earnings. This will protect in the event of unforeseen expenses or if you happen to lose a job.
2 – Put Money Towards a Retirement Account
Once you have managed to reach your savings goal, you should sit down with a financial advisor start looking into retirement options. Many employers will match a part of the money that you put into a 401(k). Find out how much they will match, and up to what amount, and ensure you are including at least that much each paycheck.
1 – Visit a Professional Tax Preparation Business
When it comes time to file your taxes, it is a good idea to allow a professional tax specialist handle your taxes. They will be able to make sure that you do not miss out on any deductions, so that you get the highest tax return that you are capable of getting. There are many affordable tax programs that you can use from home to handle your own taxes, but you run the risk of missing out on deductions due to retirement savings, charitable donations, and other easily over-looked methods of increasing your return.
If you put all these financial tips together, starting with number 5 and working your way down, you should be able to become more secure in your finances within a reasonable amount of time. Stick with it and realize that become more financially secure is not something that will happen over night.
Depending on your past debt, your current bills, and your earnings, it could take several years to finally reach your set goals. If this is the case, it may help to create short-term goals, such as paying off a delinquent online finance loan or paying off a specific credit card. Dealing with finances should not be a constant source of stress. If you have any additional questions, feel free to leave a comment below.