Saving money always sounds like a good idea, but how simple is it really? We all know we should be saving money, but not all of us have the means to, the motivation to, or the desire to. However, everyone wants to be able to live the lifestyle they desire, which may require certain financial planning.
With the best financial advice, anyone can learn how to prepare financially for their future. The most important part is knowing what your financial goals are and then making yourself determined to meet them.
Are you ready to start saving for a better financially sound tomorrow? You can do it! All you have to do is take the first step by continuing to read below.
There are several pieces of good financial advice you can start familiarizing yourself with right now. Here’s what you need to know to get started!
Start Creating a Budget
Placing money each month into a savings account is a great idea, but how much should you be setting aside? How much will this amount to at the end of the year? Before you begin saving, start by creating a budget.
You need to know how much your income is versus your expenses. Then, you need to calculate how much extra money you have left each month, after subtracting gas, groceries, and other necessities. With that being said, determine how much you can realistically put aside in savings each month.
Set goals for yourself. You should have one big goal in mind for the end of the year or the end of a 5-year period. You should also have smaller goals which are stepping stones to help you achieve your main goal.
These goals may be weekly, monthly, or semi-annual goals. Write it all out on paper or in a document on the computer so it comes to life.
Track All Your Spending
Remember to track all of your spendings as well. This will help you determine what your spending habits are like. You may not know how much money you’re spending on eating out or on other things you don’t need until you start tracking every single penny.
You can track your spending by logging into your bank account each week or month. Start recording how much money you spend on unnecessary items each month. Every dollar adds up, which could be going into your savings account instead.
If there are any errors on your account, then checking it each week or month will help you catch these errors as well. Most thieves who steal credit card information start by taking out small amounts and then work their way up to larger purchases. Catch them in the early stages and stay on top of your finances.
Begin Cutting Back Where You Can
After tracking your spendings, start cutting back where you can. This begins with eliminating unnecessary costs, but it goes even further than that. Think about your bills.
How can you cut back on your actual bills? If you pay for cable services, terminate them for now or find a cheaper plan. You may also be able to find cheaper car insurance, cheaper renter’s insurance, and so on. Shop around and find ways to save on your basic needs.
Start using coupons when shopping and learn when they put out their new clearance items or sales. When you add all of this together, your monthly savings could be substantial.
Pay off Debt by Priority
If you have any debt, then you don’t want to push it to the side. Debt needs to be paid off first. Write down all debt you owe and then place them in order of priority.
The debt with the highest interest rate should be paid off first. You can do this by making minimum payments on all other loans and paying more than the required minimum on your debt with the highest interest. Even if you can only put $10 more towards it, do so because anything helps.
You may also want to consider consolidating your loans. This is the process of combining all of your debt or loans into one loan with one low interest rate. Doing so might also help you stay on top of payments.
Open a Retirement Savings Account
If you don’t already have one, then now is the best time to consider opening a retirement savings account. There are also multiple options to decide from. You can continue building a 401k, but if your job doesn’t offer one, then you can open an IRA (individual retirement account) or even place money on a CD (certificate of deposit).
The best option for you will depend on your individual circumstances so it’s always best to sit down with someone at your bank or credit union to go over options and what might be the best one for you. Although sending money away now might be difficult to do, in the end when you retire, you’ll be thankful you did.
Create a Savings and Emergency Plan
A retirement fund is not the same as a savings account or an emergency plan. It’s always a good idea to have a savings plan and an emergency plan, which are two separate things. Your savings account can be for something you want to save up for.
Remember those long-term goals we mentioned before? This could be money you want to save up for a house purchase, a new car, or simply to have as a cushion. Be sure to open a high-yield savings account that will build interest quicker.
Your emergency funds are for emergencies only. This is for when a disaster or another extreme emergency happens and you need to tap into your emergency fund to cover yourself. Keep your savings and emergency funds separate and know how to use them correctly.
Don’t Hesitate Starting a Side Hustle
If after looking over your income and your expenses you don’t have enough money to place in savings or pay off debt, then it might be time to start a side hustle. Don’t hesitate to do so either. There are plenty of great side hustles to choose from.
You might want to start with your own hobbies first! Many people make money from their favorite hobbies such as photography or selling artwork. If you don’t have a hobby to monetize, then look into some other options such as dog sitting, dog walking, tutoring, babysitting, and more.
You can also consider applying for a second job if needed, such as a part-time job at a local grocery store.
Build Your Credit Back Up
Unfortunately, having no credit or bad credit can negatively affect your ability to get approved on renter’s applications, loan applications, and other situations. Start building your credit back up today. Once you start paying off your debt, you’ll notice your credit score rising.
You should also ensure you pay all bills on time and consider taking out a small amount on a credit card if you don’t already have one. Choose a credit card with the lowest interest rate you can find and for a small amount such as only $500. Then, use it each time you get gas and replace the money from your checking account as soon as possible.
Using a credit card and keeping its utilization under 30% will significantly increase your credit score. When you do need a loan and have no credit, don’t panic. You still have access to quick loans, which can help you without requiring you to have a high credit score.
Speak With a Financial Planner
Taking control over your finances isn’t always an easy process. For this reason, it’s best to speak with a financial advisor or planner. Find someone you trust by conducting extensive research. Then, schedule an appointment to sit down and speak with them about your personal finances.
They’ll be able to help you develop a strategy, create a budget, and more.
Consider Investing Your Money
Don’t forget there are many ways to invest your money as well. You may choose to invest in stocks or invest in rental property. Keep in mind that some investments come with risks, so you should always weigh your options.
However, if you find an investment you believe is worth placing your money into, then give it a chance. Investing your extra money rather than spending it is never a bad idea. Look into all the different investment options before making a final decision.
Utilize the Best Financial Advice Today to Get Ahead Tomorrow
Planning for tomorrow starts today. Use all of the best financial advice listed above to get you started. Remember, creating a healthier financial lifestyle won’t happen overnight.
It’s a process that requires you to use all of the good financial advice given in this guide. Once you create a budgeting strategy and set goals for yourself, you’ll be on the right track to financial success!
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