Smart Ways to Invest in Your Own Future

Although it may be decades until you retire, it may sound cliché to start the earlier the better, but it is 100% true.  The longer you wait, the less you will have in your account to compound over the next few decades.  By missing out on contributing a couple hundred dollars a month could be missing out on a few hundred thousand over time.  If you can make the sacrifices early on to free up extra money, the money you are contributing will feel like less of a burden so you can invest in your future.

Build an Emergency Fund

You never know what life will throw at you, so it’s always good to be prepared for the unexpected.  Instead of throwing an unexpected charge on a credit card when you don’t have the money, you risk going into debt, possibly taking years to pay off with interest accruing every month.  If you can put a few months’ worth of expenses in an account for an auto repair, home appliance upgrade, or even medical bills, you can have money available if you ever need it.

Compare Roth vs. Traditional 401(k)

Now while your emergency fund is important, you want to make sure that you are not leaving too much in there, otherwise it will not earn anything with the very low interest rates of a savings account.  From there you should be saving for retirement, whether that is a Roth IRA or employer 401(k) account.  With a Roth IRA you can contribute after taxes so that you can withdraw tax-free in retirement, while 401(k) will be taxed later, but reduces your taxable income to save on your income tax now.  That will depend on your situation whether it is better to worry about taxes now or later.

Don’t Leave Free Money on the Table

Speaking of employer based 401(k) accounts, you could be able to take part in company matching contributions, some even match up to 6% of contributions.  If you make $50,000 a year, that would be $3,000 that you and your employer would both contribute, for a total of $6,000.  By contributing less than 6% you are leaving free money on the table that not only are you investing, but missing out on the company match investments would could be a huge hit if you figure missing that amount compounding over the next few decades.

Leave it Alone

When you see the amount of money piling up in your retirement account you may be tempted to use that money to pay off debt, use for a down payment for a house, or even take out for a vacation, but you could seriously be jeopardizing your future by taking this money out.  By removing this money if will not be earning compound interest over time, so figure if you wipe out your account, there will be nothing there to grow.  Instead, it’s better to do the old-fashioned way and save up for big purchases, not to mention continuing to contribute to retirement accounts even if you are paying down credit card balances, as it will help you over time.

How to Help Reduce Monthly Expenses

It’s hard enough to make sure that the amount of money coming in exceeds what’s going out.  By the time you pay your monthly bills, not to mention food, gas, spending, plus hopefully creating an emergency fund and saving for the future, the money is spread pretty thin.  While, sure, you could get a second job to make a little more money, but who has time for that, so the next step is to try and free up money on monthly expenses wherever you can find a spot.

Try a Spending Budget

While clearly not for everyone since experts have said that two-thirds of the population doesn’t follow a budget, but that is probably not a good thing.  If you are having trouble freeing up extra money you can try allocating where funds are going in the month, and once the money is gone, it’s gone until next paycheck.  Sure, you will probably have to tweak how much you are allotting for, but that is part of the process in having a successful budget.  Maybe it will at least curb spending a bit and you can open up extra money each month.

Make the Tough Cuts

No one ever said saving money is easy, probably the reason why lots of people don’t.  If you are really having trouble freeing up extra money and you have exhausted all attempts, then it is time to make the tough cuts.  For starters, look to cutting the cable cord.  You probably don’t watch enough TV to necessitate spending a couple hundred dollars a month.  With the best shows on streaming services these days anyways, you can get an HD antenna for $20 to get local channels, and then get a streaming service or two like Netflix and HBO, and you’re probably good to go, without paying to flip around with nothing on.

Compare Prices

It used to be that comparing prices would mean you would see the product and then go store to store to find the lowest.  While it may have made sense before, with online shopping now there really is no need to waste gas and time on driving around town when you can click from website to website in a matter of seconds to see what the best price is.  The best part too is the free shipping, so you can shop for the best price and then have it shipped for free, arriving a couple days later.

Discounts are Key

Whether it is clipping coupons to go growing shopping, using Groupon, or mail ads that you receive probably daily, there is still no reason to pay full price on anything that you can help.  Sure, it takes a little legwork, but saving money is the goal in the end.  In addition to coupons, if you can get a good rewards credit card you can money back on the purchases that you were going to make anyways, whether it’s in the form of miles, points, or even rewards dollars.  There are plenty of discounts out there, if you are willing to put in the time to save money.

Ways You Are Jeopardizing Your Wealth

Sure, maybe money isn’t the most important thing to everyone, certainly you have always heard that money doesn’t equal happiness, but there is a fine line on needed enough money to live off, especially during the retirement years when you should be able to leave the workforce behind and enjoy out your remaining years stress-free.  Soon enough you’ll be of retirement age, so it’s best to focus on your personal wealth sooner than later, otherwise you will either be playing catch up, or have little to live off.

Putting Off Saving

A 401(k) account is a great way to save now that can grow over time, but the longer you put off, the less you’ll have to live off during retirement years.  The longer you put off, the more you will have to contribute to catch up to the years where you should have contributed more.  Some employers match contributions, so you should at least be contributing that much, otherwise that would be leaving free money on the table that could be growing over time.  If you are not able to use a 401(k), there are IRA options as well.

Spending is Out of Control

In order to free up extra money every month then you really need to reduce unnecessary spending.  Unless you curb spending, you really could be putting yourself at risk financially.  If you’re not sure where exactly the money is going, a good idea is to take a look at last month’s credit or debit card statement and look line by line to see what was a needed expense and what probably could have been avoided.  Add up all of those charges that could have been avoided and you could be shocked at what could be in your bank account instead.

Not Managing Risk

If you’re getting by with your finances on a month to month basis now that is great, but what is something unexpected happens and you have a huge charge come in such as a needed auto repair or home appliance, how would you pay for?  Probably on a credit card, at which you are then in debt, trying to pay back over time, at which you could be struggling to pay.  If you can create an emergency fund of a few months’ worth of expenses, you could give yourself a pretty good cushion to cover yourself if any unexpected charges come in.

Looking for the Next Get Rich Quick

If you are thinking of playing the lottery next, take a look at the odds of winning and hopefully that will change your mind on playing every week.  The get rich quick scheme are just that, too good to be true, so also avoid any of the Tupperware or candle parties, trying to make a living, other than enjoying some discounts for your friends.  If you are looking for extra income, try getting a second job in your free time, or even look to selling items that are otherwise sitting around the house collecting dust.

Money Moves to Improve Personal Finance

Handing the household finances is a tough job, in fact it is one that should not be tackled alone.  If you have a significant other, should work together as a team, after all it’s both of your money, or if you are living alone, it’s always a good idea to bring in a family member or friend that you can trust, or even better, a financial advisor.  If you are looking to give your personal finance a boost, try starting a few behaviors that may help.

Build Up an Emergency Fund

You never know what life is going to throw at you, so it’s always a good idea to be as best prepared as you can.  If you had a sudden auto repair that was more than you expected, a home appliance replacement that would cost thousands, or even worse, if you lost your job and it took months to find a new one, how would you handle these costs?  The simple answer is that the expenses would go on a credit card and worry about them later.  If you can put a few months’ worth of expenses in an account, you can have available cash if any large sudden expenses come up.

Reduce Unnecessary Expenses

Not only do you need more money coming in every month instead of going out, you need to reduce the money going out as best as you can so you free up more money for either paying off debt, saving for a rainy day, or more importantly, saving for the future.  If you can start paying attention to what you’re spending money on, you can then try and fix your spending behaviors.  Try looking at last month’s debit or credit card statement and go line by line.  Add up what should have been avoided, and you will probably be shocked.

Save for the Future

As you are continuing to free up money every month, more and more priority should be on saving for the future.  Retirement may be the last thing on your mind right now, but if you can start stashing away money now, it will have more time to grow over time.  A 401(k) is a great way to start saving, not only does it help relieve some tax burden, but your company may match contributions up to a certain point, so that is free money!

Take Advantage of Credit Card Rewards

I’ve gotten so used to the credit card rewards now that I put every single charge on a credit card so I can earn 1-4% cashback every year.  Now I’m talking the expenses that I would have spent anyways.  If you start charging just go earn rewards you will be in for trouble, so it’s always a good idea to set a spending budget so you can make sure you don’t go overboard and you’re not able to pay the statement balance by the due date, otherwise you start paying interest and that is just asking for financial trouble that could take years to dig yourself out.

Smart Ways to Boost Your Credit Score

First impressions are lasting, and there is nothing more important to the eyes of the lender than your credit score to see if you are worthy as a borrower.  The higher the score, the better, in order to take advantage of the most favorable rates on the market.  Your score can affect your loan approval or denial, so whether you have had credit troubles in the past or are looking for ways to give it a boost, there are important behaviors to continue to possess in order to continue to see your credit score rise.  You can now see your credit score included on credit card monthly statements, so each more you can see your score rise or fall.

Every Payment On-Time

Lenders want to see that you repay your debts on time if they are going to continue to lend to you, so it’s important not only to avoid late fees and possible interest rate increases, but if thirty days late, it will be marked on your credit report that could take up to seven years to come off, so one mistake, and it could take the better part of a decade to come off, so make sure that payments are made on or before the due date each month.  A good way to make sure all payments are made is to split between paychecks, so that way you can even out payments made, and leftover cash.

Pay Down Debt

Just as important as payment history is the amount of debt you carry compared to the credit line.  The closer you are to reaching your credit ceiling, the more you will significantly reduce your credit score.  Start paying down debt and you will start to see your score rise each month.  Just keep in mind that reports are typically a month or two behind, so if you have made a large payment recently, it may take a little while to catch up until you see the score boost.

Leave Accounts Open

It’s a huge weight off your shoulders to finally payoff debt, especially if it has taken years to overcome a credit card problem.  The first instinct you may have when you finally have that zero balance would be to close the account so you never have to risk charging it up again, but in fact, it will help your credit score to leave the account open, and if you don’t want to use the card just simply cut it up, that way you will have the available credit and length of the account will continue.

Limit Credit Applications

Every time you fill out an application and credit is pulled, there is an inquiry on your credit report that will stay on there for up to two years.  Since it will remain on there for a while, it’s best to limit your credit applications to only necessary decisions such as a lower interest credit card or mortgage, and avoid submitting to shop around, at which the more applications that you submit it could give the impression that you are looking to go on a shopping spree.

Ways to Stop Stressing Over Money

Whether you have money or not, it can be the cause of much stress in your life.  Often people try and figure out when it means that you are officially an adult, and I’d say by the time you handle your own finances, because it is no simple task.  While it’s not good to have stress in your life, you get enough with work and family that you do not need one more thing to add to the list, so try your best to avoid, although it may not be easy.

Be Prepared in Case of an Emergency

You never know what like may throw at you, so it is always a good idea to be prepared.  If you have an unexpected auto repair, medical bills, or even worse, job-loss, you want to have a little cushion to tide you over without putting on your credit card and getting yourself into debt.  Experts say that you should have three to six months’ worth of expenses in an account that is easily accessible such as a checking or savings account, although some argue that having too much in there is not benefiting you by not growing while sitting there.

Maximize Saving for the Future

Sure, after paying all the monthly bills you wonder to yourself where are you going to get extra money to save, but you need to make it work in order to have anything to life off of when you retire.  Whether it is a work 401(k) account (check to see if you have company matching), or an IRA, there are plenty of options to get started now, the earlier the better so it can continue to grow over time and give you a nest egg to rely on during your retirement years.

Stay Out of Debt

Easier said than done, I know, but staying out of debt is key when it comes to reducing money stress.  When you go into debt you can put a lot of weight on your shoulders, giving yourself that quicksand sinking feeling, but if you do not have a debt payoff plan, now is the time to start so that you can be on the path to becoming debt-free.  The larger the payments you make, the better, so that you do not have to waste away money on interest that could be best used towards saving for your future.

Reduce Expenses

To save yourself a load of stress, try reducing expenses so that you have extra money freed up every month.  Take a look at your credit card or bank statement from the previous month and see what you are spending money on so you can look to avoid.  A good place to start would be reducing the amount of times you go out to eat.  Depending on your family size, that could be a huge chuck on money that otherwise would be a fraction of the size if you planned and ate meals at home.  A few tweaks in your life removing unnecessary expenses can make a huge difference.

It’s Never Too Late to Improve Your Personal Finance

Whether you are new to keeping track of your finances since you have gotten a job out of college, manage the family funds, or are working your way towards retirement, it is never too late to improve your personal finance.  Many of us do not keep a budget, which can be scary for the fact that we could not be imposing spending limits on ourselves and probably minimizing how much we are saving, never a good thing when it comes to saving for the all-important retirement years.

Get Spending Under Control

Really, the primary way to free up extra cash, especially if you’re already on tight on funds is to reduce spending.  A good way to see where your money is going is to review last month’s bank/credit card statement and go line by line reviewing what was a necessary monthly expense, what was spending money, and what probably could have been avoided.  One place that is typically easy to spend money on is eating out, due to the convenience, but has plenty of up charge.  If you can avoid eating out, do regular grocery shopping at eat your meals at home, you will see the savings pile up.

Maximize Savings

When it comes to saving, not only money each month, but to save for the future, automated, regular contributions are the way to go.  It is good to set up an emergency account to available cash on hand to avoid using a credit card for unexpected purchases, but beyond that, the focus really should be on saving for retirement.  Maximizing contributions to your work 401(k) account, whether it is a combination of increasing each year, or having employer matching, is where you will get the most out of saving for retirement.

Allocate Funds

A great way to ensure that you have the necessary funds going to the right places is to set a budget and allocate funds.  Trying setting a limit on spending, and well as setting aside money for food, gas, monthly expenses, and of course, saving.  Most Americans, two-thirds in fact, do not keep a household budget (or have tried and it failed and never continued), so it will take work and tweaking along the way, but anything to keep spending under control and maximize savings is worth trying to see if it is right for you.

Try Using Cash Instead of Credit

If you are having trouble keeping spending under control, whether it is on clothes, bars, or restaurants, try putting debit and credit cards away and just use cash.  Set aside how much you are “allowed” to spend each week and stick to that amount.  If you run out, you run out.  Dealing with cash could actually help reduce purchases, because when you use cards, especially credit cards with virtually endless credit limit, you lose that feeling of seeing money leave your account and go into the register, so using cash could at least help you think about completing a purchase.  If you are on the fence, think about it for a week or two and see if you still want the item.

Smart Actions to Maximize Retirement Income

No matter if you are a recent college grad and are looking to begin your career, or if you have been in the working world for a decade, retirement may be the last thing on your mind as you are more focused on making money and starting a family, but the fact is it actually is not that far away, and the longer you wait to build up your retirement account, the less you will have to live off of when you need it most.

Maximize 401(k) Contributions

If you are not contributing at all, well then stop now and make the necessary changes to ensure you are funding your future.  How much to contribute will depend on your available money, but if your company offers any matching contributions, then you should at least be using that as a starting point, otherwise that will be leaving free money on the table.  From there you can look to increase your contributions every year, and anytime you get a raise or pay off debt, you can use the savings to increase your contribution percentage as well.  Every year you wait could decrease your balance significantly by the time you retire.

Create a Budget

We all could use a little extra money, but creating a budget may be a way to lower expenses and increase the cash on hand in order to add funding for retirement.  If you can allocate funds for monthly bills, plus setting aside to use for spending on food, gas, and entertainment, and can stick to that amount, it may eliminate unnecessary purchase and free up quite a bit of money.  You can even take it a step further and make sure you go over last month’s statement and review each purchase line by line, see what could have been avoided and add it up.

Build Up an Emergency Fund

You never know what life may throw at you, so it is good to be prepared in any aspect.  If you are making significant progress in funding your future and living on a strict budget, what is something happens like a car repair, or even worse, a job loss?  If you can have a few months’ worth of expenses sitting in a savings account for quick cash if needed, it will avoid putting on a credit card and making you go into debt if a huge unexpected charge hits you.

Stay Out of Debt

This may be common sense, but it is still worth nothing that if you are planning on getting ahead financially, you can’t keep taking steps back by getting in debt, so do your best to avoid carrying over a credit card balance and getting out of hand, wasting money on interest when you could be using that money for your future.  If you have more money going out versus coming in over the course of the month, then something is wrong and adjustments need to be made.  It’s tough, and those that are secure financially sure didn’t get that way easily.

Tips to Maximize Your Nest Egg

No matter where you are at in your career, whether you are just out of college, or are even nearing retirement, it is good to ask yourself how much you need in retirement and track to see your progress.  If you are like most that unfortunately do not seem to be adequately saving for retirement, now is as good of time as any to get the ball rolling to be in control of your financial future.

The Earlier You Start the Better

Just going by simple math, if you have decades left until you retire, you can contribute very little each month and, along with a growth rate, could put you in a great position to have the funds you need in retirement, but what about if you have not done as good of job as you should have, or haven’t contributed at all?  Well you will have to start now, and you will have to contribute a significant amount, and the longer you wait the more that amount goes up, and you could seriously be putting yourself in jeopardy of not having anything down the road.

Don’t Leave Money on the Table

If you are able to take advantage of a company 401(k) account and your employer matching contributions up a certain amount, say 6%, you could be missing out on thousands of dollars a year that could be put into your account.  If you are unsure how much to contribute to 401(k), so can’t put together a large amount to give, you should at least be doing the maximum company matching contributions as a minimum, and from there you can gradually increase contributions each year and work with a financial planner if needed.

Out of Sight Out of Mind

Direct deposit is a beautiful thing, so you do not have to manually transfer money over to a savings account, and risk avoiding missing the transfer and spending the money instead.  If you are in and out of your checking and savings accounts there is more temptation to build a savings account, but the hope that you are starting to see a real balance rise each month could be incentive enough where you don’t want to touch and start to have goals of where you would like the balance to be.  If you never know it’s there, you can’t spend it.

Don’t Get Used to Available Funds

Sure, it is great to have a nice annual merit increase, or a large year-end bonus, but the more you get used to having extra funds in your account, the more likely you will be to spend.  If you are getting annual merit increases, this would be a great time to increase 401(k) contributions so that your raise will be absorbed for retirement.  As far as bonus, it may not be the most fun option, but certainly debt pay off or building an emergency fund in case unexpected charges occur where you need available cash is a great place to put any extra money you come across.

Stay Ahead of Your Financial Future

According to a recent study by Country Financial, two-thirds of Americans are worried about their financial future, worried that they will not be able to retire at all.  In fact, The Economic Policy Institute reports that half of Americans do not have any retirement savings, and even half admit that they do not factor saving for retirement into their financial goals.  That is a scary thought that in the upcoming decades there will be less and less people with anything to live off during retirement, other than Social Security, which isn’t much, if it is even there at all by the time you are of age.  In order to be the minority where you actually care about your future and plan accordingly, now is the time not only plan but stay ahead of your financial future.

Cut Expenses to Maximize Savings

We often hear that most live paycheck-to-paycheck, so it’s no wonder that there is no room for savings, but that doesn’t mean that those that are struggling are making the right decisions.  If you can reduce what you are spending, every dollar you free up can go towards saving, so you need to look at where your money is going so you know exactly what to cut.  If you take a look at your monthly statement and go line by line, you can start to put them in a category “necessary” or “unnecessary”, and add up to see how much you could have saved.  A good place to cut that is easily spent on is going out to eat.  If you can reduce that to even going out once a week, compared to multiple, you can save hundreds of dollars a month by eating at home.

Every Little Bit Helps

The more you can put aside now the better you will be off in the future, so although it may look like a small amount, it is worth it.  Some think that retirement is too far off to worry about now, but if you think about it, how long have you been out of college?  How long have you been married for?  It may seem like yesterday when you were entering in the working world or starting a family, so if time went by that quickly, imagine how fast it will go for retirement, and unless you start paying attention now, you will not have anything to live off of during the time you need to.  A work 401(k) account is a place where you should be regularly contributing towards now, and even some employers offer matching, so you should at least be contributing that much right now, otherwise you could be missing out on free thousands of dollars every year that would be huge to have when you need it down the road.  From there you can gradually increase contributions each year, or look to invest in a Roth IRA, which does not offer you the tax-savings now, but you will be able to withdraw tax-free in retirement, when you will need every dollar you can.

Start Your  Own Business

Saving money you earn at your day job is all well and good, but sometimes you want more for your financial future. I often times recommend starting your own business! I have been running a growing side business for the past 7 years and couldn’t be happier. It has allowed me financial freedom that I never thought possible. If you do venture down this path there are a few key things to keep in mind. First and foremost, have a business plan. It’s amazing how many small businesses fail early on simply because they lacked the proper planning. Second, don’t do everything on your own. There is a certain want and need to keep more of the money for yourself, but investing in necessary essentials like an accountant or a cloud-based ERP solution can benefit you in the long run. Last, but certainly not least, make sure you have enough capital and funding to keep you afloat the first year. Even a new business with a winning idea can flounder due to having a lack of capital until they turn that pivotal corner.

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