Take Control of Your Finances in 10 Steps
Everyone dreams of a more secure financial future. Don’t be discouraged if you sit at the beginning of the path. Maybe this year it’s your turn. Here then are ten simple but effective steps to build a better financial future.
Set Financial Goals
If you don’t know why you’re doing this — why you’re making sacrifices, why you’re working so hard — it’s too easy to fail. But if you set goals, they can help guide you even when things get tough. When you have to make decision, your goals can help you stay focused on what’s important.
Track your Spending
It doesn’t matter how you track your spending— the most important thing is to do it. You can use a piece of software like Quicken. Whichever method you choose, stick with it. Make it a habit. Don’t fudge the numbers. Record your transactions as soon as possible. Most of all, don’t judge yourself. Tracking your spending is an exercise in data collection; it’s not the appropriate time to change your habits.
Set a Budget
After you’ve tracked your spending for a few weeks (or months), use the data you’ve collected to develop a budget. Budgeting is one thing that sets the wealthy apart from the rest of us — 55% of millionaires keep a budget.
Review your Accounts
At least once each year, you should review the contracts and agreements you have with various banks and service providers. This is also a great time to review your financial accounts to be sure everything still matches your needs.
Build an Emergency Fund
Many Americans live paycheck-to-paycheck. They spend everything they earn. This works well until something goes wrong. Suddenly they find themselves without money to pay for a car repair, or facing an expensive doctor’s bill. Emergencies are financed with credit cards. Eventually, you need to see the light and built up a rainy-day fund.
Get Out of Debt
Are you struggling under a heavy debt load from credit cards or student loans? Make it a priority to unload some of this this burden.
Fund your Retirement
If you’re young, you probably don’t think you need to start a retirement account. You’re wrong. No matter how old you are, now is the time to begin saving for retirement. The extraordinary power of compound interest favors the young — and in a big way!
Automate your Finances
Over the past several years, there has been a movement toward a system of paperless personal finance. Along the way, one learns the value of automating routine transactions. When you make things automatic, you remove the human element, making it more difficult for you to mess things up.
Earn Extra Money
You can meet a lot of your financial goals by reducing your spending and using the right tools. But nothing supercharges your progress like a boost in income.
Knowledge is power. Personal finance doesn’t have to be a mystery.