4 Ways to Be More Financially Responsible

If you actually sit down and look over your finances, first adding up how much money comes in each month and then totaling the expenses and spending that occur, it probably will leave you sick to your stomach.  It is never too late to start being a little more financially responsible.

Set Up an Emergency Fund

Experts have said that you should have at least three, even up to six months of reserves sitting in an account just in case you have a sudden need of cash to pay for say an auto repair, or replace a TV or refrigerator, it is nice not to put on a credit card, especially if you are on a strict budget and this could take months to pay back.  Six months would be good to have, never know if there is an unexpected job loss.

Make Regular Contributions to a Savings Account

It can be tough to find extra money to put into savings, especially if you are having trouble making ends meet now, but if you have to manually transfer money over the probability that you will spend it on other things is far greater than if you were to make regular automatic deposits to a savings account.  Start with a couple hundred dollars a month if you can, gradually increasing as you get used to the money not being available in your checking account to spend.

Don’t Forget About Retirement

So, you have ample reserves for an emergency and are starting to put a little into a savings account for the future, but what about something that will grow with compound interest that you can contribute to that will take care of you in your golden years?  Well do not forget about your 401(k) account at work.  Like you have been doing with the savings account, start to give regularly scheduled contributions each paycheck, starting with say 1-3% for the first year, gradually increasing each year.  If you have the opportunity to have the company match any contributions you should take advantage of that, as otherwise it is just leaving plenty of money on the table.

Continue to Reduce Unnecessary Expenses

With a huge portion of your money now funding various accounts to leave you better prepared for the future, it may not leave much left otherwise, but that is the goal.  Now that you are an “adult”, you need to start being a little more financially responsible and stop splurging on unnecessary items.  My wife and I just went out to dinner the other night, we did not feel like cooking or grabbing unsatisfying carryout, so we went to a local favorite Italian restaurant and spent $60 on entrees, one drink, and tip.  While the food was excellent, we probably could have done without and found something to eat at home for free.  That is the mindset to start to have, how can you save extra money every week.  That savings added up every month, think of how much you can save in a year.

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