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.

Money Mistakes You Could Regret Later in Life

There comes a time in your life when you reach a certain age or stage in your career when you can look back and reflect upon where you are at.  You don’t have to necessarily be old to do this; you could be in your thirties, ten years into working and still have wished you had done things differently, driving further motivation to ensure you are doing what is right by your financial life.  Before it is too late, ensure you can avoid making money mistakes now so you will not have to regret later.

Renting vs. Buying

I was a fairly independent young adult, so I was ready to move out on my own outside of college, probably too soon, in fact, that I spent years renting instead of buying my starter home.  While I would not trade the great times, I had with my roommate and best friend, it would have been nice not to have thrown money away on rent for two years instead of towards equity in a home.  Looking back, either continue to live at home until I could buy a house.

Being “House Poor”

While it is great to invest in real estate, sometimes you can get over your head and buy the biggest and the best and have most of your income taken up by the mortgage payment, not leaving much left for anything else, hence being house poor, so to speak.  You can own and live modestly, while freeing up more money to have fun, afford expenses comfortably, and save, save, save.

Not Having Money for Unexpected Charges

If you had major car repair, had to purchase a new furnace, or worse case, lost your job, how would you be able to afford without putting on a credit card and sending you into debt?  Experts have said that you should keep at least three months’ worth of expenses in an account in case you need to access later.  You probably want to avoid putting too much in there though, as it could be better suited an investment account, earning more than the tiny interest in a savings account.

Never Using a Budget

A Budget is a great way to track every dollar coming in and going out.  If you can set allocated funds for bills, food, gas, spending, as well as contributing to savings account, you can continue to free up extra money as you reduce unnecessary spending.  If you review the previous month’s statement, you can circle necessary vs. unnecessary spending, and add up those that could have been avoided and you could be surprised.

Forgetting to Build in Life Experiences

Speaking of a budget, while you do factor for all spending, it is important to budget for life experiences, as they are important to not only your sanity, but enjoying life.  If you can plan vacations, concert and sporting event tickets in advance, you can still be able to take part by planning in advance and not getting hit at once when you are ready to book.

5 Excuses to Avoid Not Saving for Retirement

Retirement seems like it is so far away that it is probably the furthest thing from your mind right now, especially if you just started your career, we’re talking decades away from happening.  What you should realize is though, is that the earlier you can contribute, the more it will compound, and the more you will have to enjoy when you need it.  Avoid all of the putting retirement savings off excuses and start contributing now.

It’s Not a Priority Right Now

That might be a valid excuse for your high school, college, or even immediately out of school and into your career, but the longer you wait, the less you will have to live off and enjoy in retirement, so if it is not a priority right now, make it one.  You can still save for your next vacation but you will need reduce expenses somewhat so that you can allow a portion of your income to be saved.

Don’t Have Company Matching Contributions

Some companies offer if you contribute to 401(k) they will match up to a certain point, say 6% per example.  That is free money, of which could be thousands of dollars put in your account just by you contributing the same, but just because your company does not offer, you still need to contribute the maximum you can, and even higher without the extra gift from your workplace.  The next time you are in the market for a job, take 401(k) matching into consideration.

But I’ll have Social Security

If you are a Baby Boomer you will be lucky if Social Security will be there when you retire, let alone a Millennial.  Well maybe it is not that far off from being extinct, but any notion that you will be able to live off of Social Security can be squashed right now.  Even if it is there by the time you retire, it will be a fraction of what you make now, so if you are used to living high on the hog now, those days will for sure be over, when it will be the time you should be enjoying life even more.

Afraid There Will Be Another Crash

You could be a little more conservative with your retirement fund allocation, but you can’t let the stock market crash of roughly ten years ago sway you from saving for your future.  Sure, most of you, and if you’re younger, your parents, may have finally recovered from that devastating crash, you cannot jeopardize your future for something that may or may not happen, that is out of our control.

I Don’t have the Extra Money

Now I totally understand that if you are barely getting by with your regular bills, there is not much leftover to contribute to savings, but this is where you will have to be creative.  What is your spending money situation like?  Do you have excessive shopping, go out to eat a lot, do the bar scene?  Well every little you can avoid spending you can put towards saving, so try and make the best spending decisions you can.

Five Ways to Make Your Financial Life Easier

Let’s face it, managing money can be stressful, whether you have it or not.  It can put plenty of weight on your shoulders and the sinking feeling sets in if you are starting to become buried in debt.  While handling the finances can be overwhelming, there are a few ways that you can make life a little easier for yourself by not only first taking a deep breath, but to make some adjustments in your life that you will allow you to be more successful handling the family finances.

Review Finances More Often

It can be quite a shock to go over your bank or credit card statement when it comes in, seeing that total due by the beginning of the month, wondering where you are going to be able to come up with the money to pay off the balance.  By reviewing the finances more often, such as weekly, you can go over every dollar spent during the month, not to mention each bill coming due to ensure you have gotten it down to the lowest it can be (i.e., electric, gas, cable, cell phone).

Get Rid of Paper Statements

Reminded of the Seinfeld episode when Kramer decides he no longer is accepting mail, it can be annoying not only to check the mailbox each day, but to make sure you are receiving everything you should.  When it comes to bills, statements, etc., turn off paper statements and start to receive emails.  You will receive right away and can plan ahead with plenty of advance of it coming due to ensure you have sufficient funds.

Automate Direct Deposits

I’m assuming that your paycheck is already direct deposited (if it’s not, that should be the first thing you do tomorrow morning with your employer), but more specifically, once you have paid bills for the month, do you manually transfer money over to your savings account?  If there is money leftover in your checking account you will likely spend it, so save the trouble and set a predetermined direct deposit to your savings account each paycheck and avoid manually transferring money back and forth.

Equalize Monthly Bill Payments

Bills are due at all points in the month, so one way I’ve been able to have success is to divide up the bills as equally you can for each paycheck.  Let’s say for example half of your bills you can pay with the first paycheck and the other half with the second.  That way you can avoid any shortages and have more of a set payment and spending money available schedule.

Stick to a Single Card for Purchases

Credit cards can be tricky, with virtually endless spending limits, so you may be enticed to use many cards, but it will be significantly easier if you stick to one credit card or debit card for purchases, knowing what you have spent and when it is due.  Picking the card with the best rewards program can net you plenty of savings, whether is in redeemable points or a cashback check once a year.

A Plan to Improve Personal Finance Substantially by the End of the Year

Life is full of obstacles and other priorities in the moment that make it easy to put off financial planning until down the road, but the problem is that time goes by just way too fast and pretty soon before you know it you are halfway to retirement age and not much to show for it.  Before it is too late and you can salvage some financial future, the time is now to improve your personal finances significantly by the end of the year even.

Sit Down to Review Full Financial Picture

Whether it is your spouse, a knowledgeable friend or family member, or even a financial planner, you will need a place to begin.  This would be the all-important step of reviewing what your goals are, and put a place in place to reach, while paying off debt and increasing savings.  This could be a good time to go over current spending habits as well to look at areas of improvement, as you will want to reduce unnecessary spending.

Create a Budget You Can Stick To

This is where it gets tough and will take a little tweaking along the way.  You will need to note every dollar that comes in as far as income goes, and everything that goes out.  This would be monthly expenses and all spending as far as food, gas, and fun, and not to forget contributing to a savings account.  As you specify how much money goes to each, the trick will be to make sure that is enough to cover and realistically stick to it.  If you can, you will reduce spending and open up plenty of extra cash.

Build Up an Emergency Fund

An emergency fund is good to have as a place to access cash if you need it, and the key word being in an emergency.  As part of the budget you will want to reduce spending and every dollar will be accounted for, so a large unexpected expense such as auto repair may throw your budget out of whack, so instead of putting on a credit card, you can access your emergency fund to pay for.  Experts say that three to six months is sufficient, with six being there to cover an unexpected job loss.

Increase Retirement Contributions

Now that you are trending in the right direction and hopefully freeing up extra money each month as you are reducing spending, you should start to increase your contributions to a work 401(k) account or an IRA, where you can grow over time to hopefully support you after you have retired and live out the remaining of your golden years.

Continue to Make Progress

If you have followed these steps you should be in pretty good shape in the upcoming months, with the hope that you have been able to successfully figure out your goals, create a budget that you can follow, and by the end of the year hopefully you’ve been starting to build that emergency fund so that you will then be able to put your efforts to saving for retirement.

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.

How to Improve Your Credit Score Starting Now

Your credit score is the first impression of you when it comes to lenders, and it can tell a lot about you, if you are a responsible borrower, or if you do not take your finances seriously.  Whether you already have great credit or you are in need of improvement, you should always strive for the best to take advantage of the best rates on the market.

Take a Look at Your Credit Report

The fastest way to improve your score may just be because of misinformation on your report that needs to be cleared up.  You should at least look at your credit report once a year to make sure that all personal information and accounts are up to date.  Keep in mind that reports are usually at least a month behind, so if you just made a large payment or closed an account recently it may not have caught up yet, so not to worry.

Pay Down Any Debt

If you have a spending issue now, the first plan of attack is to stop using a credit card to avoid continuing to rack up the account balance that you are currently not able to pay off, so why keep increasing it.  Cut up the card if you have to, whatever keeps you from spending, and really focus on paying down debt.  If you are carrying a balance over each month, you will be charged interest, so you will need to make large payments in order to see a reduction of the principal balance, instead of the payment all going towards interest charges.

Keep Accounts Open

A common misconception is that once you pay off an account, the first instinct would be to cut up the card and close the account.  While cutting up the card is not a bad idea so you can avoid using the credit card if you previously had a spending problem, but closing the account could actually hurt your score.  A portion of your credit score is based upon the overall debt to available credit, so if the account is closed, you could drastically be reducing your available credit and make your debt situation look a lot worse than it actually is.

Set Up Automatic Payments

The biggest advice to give, is pay on time.  Late payments that are thirty days past the due date can stay on your credit report for up to seven years, so to show lenders that you are a responsible borrower, make sure it is paid on time.  Not only to keep your credit report in check, but paying even a day late can incur late fees or hike up APR, which will make interest charges skyrocket.

Stop Applications

Although it is a small portion, credit inquiries do make up part of your credit score, so every time you apply for a new credit card, personal loan, or mortgage, when they pull your credit, it affects your score.  Try and make sure that if you are having your credit pulled, you are looking to proceed if it improves your situation such as a mortgage refinance to a lower rate, or a credit card with say 0% APR.