Handling the household finances are tough, so much in fact that it’s no wonder why most do not hold down a successful budget and are in credit card debt. Now, you don’t have to run a budget to be successful but for some, it may help, instead of having a spending free for all throughout the month. Carrying debt is a different issue, one that should be addressed so that instead of paying back the money you owe, you can get ahead and start focusing more on your financial future. In order to get ahead you may have to make a few changes in your life to adapt to some smart money moves that you can begin making starting now.
Build Up an Emergency Fund
You never know what life will throw at you. You can have a firm plan, have your funds allocated in certain areas, and then all of a sudden you get hit with a huge medical bill, your car breaks down and is not covered in the warranty, or even worse, you lose your job and it takes a few months to find a new one, so what do you do in the mean time? Well instead of put on a credit card and go into debt, of which you will seemingly never be able to pay back, it is a good idea to have an emergency fund of a few months’ worth of expenses that you can use to float you.
Pay Off Debt to Avoid Interest
As you now have money aside for a rainy-day emergency, you can now really focus on getting rid of that credit card debt. Since you are carrying a balance over each month you are paying interest, so it is good to have a payoff plan in order where you can figure out a set amount to pay each month, over a set number of months, where you can rid the balance. Sure, you may have to make some sacrifices in the meantime to afford to make high monthly payments to get rid of it, but it’s worth it.
Earn Money on Credit Card Rewards
Credit cards can be the downfall for some when it comes to not having the willpower to hold off on the virtually endless credit limit, but if you can handle that, credit cards actually make good financial sense when it comes to solely the rewards. You can earn points to redeem for gift cards or even get a check back once a year with actual cash, just based on purchases you were going to make anyways. The trick is, not to spend more just to earn rewards.
Reduce Necessary & Unnecessary Expenses
In order to free up any extra money you need to reduce what is going out, so that comes in the form of necessary and unnecessary expenses, of which you can seek to lower both. I would lump utility bills for necessary, but you can strive to lower gas and electric bills by watching lights being on and monitoring temperatures in order to lower expenses, and cable, you can reduce or remove altogether and opt for a streaming service. For unnecessary expenses, take a look at going out to eat, shopping sprees, etc. If you pull last month’s bank or credit card statement and go line by line, try and add up what could have been avoided, it might shock you.
Maximize Retirement Contributions
The more money you free up can now be put towards retirement. As the amount to contribute, that will depend on your situation, so you can always consult a professional to help you get to your goal, but you should at least contribute to 401(k) that maximum your employer matches, and beyond that, look for a gradual increase every year to feel less of a burden at once, while maximizing what you are contributing to live off when you don’t have to worry about working any longer and can enjoy life.
Don’t Take on the Burden Alone
Handling the household finances is a tough job whether you are single or have a significant other/children to worry about, so regardless of your situation it is always a good idea to bounce ideas of a family or friend that you trust, or even better a professional, to ensure that you are on the right track and are making all of the right money moves for your situation to maximize savings, minimize spending so that you can build up that nest egg to enjoy for years after leaving the working world.