Getting a handle of managing your basic personal finances can return many financial rewards including providing you with more free time to pursue your interests and freed up money to invest. The basic elements of anyone’s personal finances include a personal budget, savings and investment planning, managing your income and outgoings resourcefully as well as applying for loans and finance and various insurance policies you may need over your lifespan. Here are five thing’s you need to know in order to balance your personal finances effectively.
1. Budget– I cannot stress enough how important it is that you have a budget. Working without a budget usually leaves you mystified as your paycheck seems to disappear; leaving you empty-handed by the time the end of the month rolls around and it’s time to pay the bills or put food on the table. In addition, when you create a budget, you begin to see a clear picture of how much money you have, what you spend it on, and how much, if any is left over. Without a budget, your finances will be all over the place. If you want to learn how to create a budget that works, then be sure to register for my FREE 30 day budget bootcamp beginning January 1, 2016.
2. Invest-To be more efficient in dealing with personal finance basics, it is important to choose wisely when and how to invest. Put your money to work earning interest in a savings account or returns in a retirement fund or a mutual or index fund or build equity in your home by paying down your mortgage. Better yet, increase your assets by investing in a few of these options, while keeping a liquid savings account for emergencies. Failing to take advantage of free money is a common personal finance mistake amounting in money lost to inflation and missed opportunity. Be cautious of investments that promise a high return with little or no risk.
3. Practice Debt-Management– If you are striving to be debt free, create a sound budget and cut unnecessary expenses. Mis-managing your debt through overspending, failing to budget or high interest rates can quickly send you in a downward spiral. The best way to handle debt is to stay out of it in the first place. Remember to stay away from temptation to “buy now, pay later” and only take loans for the essentials in life: education, transportation and habitation. As a general rule, do not finance anything for longer than its useful life. Keep your credit score high by keeping tabs on your credit report and paying your bills on time.
4. Get Insurance-You are working hard to build a firm financial footing for you and your family, so it needs to be protected. Accidents and disasters can and do happen and if you aren’t effectively insured it could leave you in financial ruin. Quality insurance can protect your life, your ability to earn income, and to keep a roof over your head.
5.Save For Retirement– With fewer companies offering full pension plans and the uncertainty of Social Security, it is more important than ever to save and plan for your retirement. Unfortunately many people feel that they simply don’t have enough money left over each month to save. Retirement savings should be a top priority instead of an afterthought.
So there you have it! If you utilize these five tip’s, you are on your way to financial freedom! As usual, I want to hear from you, let me know if you have any other tip’s to share.
Your Money Make-Up Artist,
Helping you contour YOUR pockets, lift YOUR bottom line and highlight YOUR future