While a 52 week savings plan may be a good idea to come up with extra money at the end of the year, there are other behaviors you can adapt in order to really free up extra money to put your hard-earned dollars to more important areas such as building a cushion, paying off debt, and funding your retirement account. While retirement may still even be a few decades away for some, it certainly will go quick, so it’s important to start saving the earlier the better in order to really maximize your retirement income so you can ensure adequate funds to continue with life experiences when you finally don’t have to worry about work any longer. Remember, your financial situation only applies to you, so living within your means needs to be the priority and focus.
If you were to write down how much monthly bills are would you know? Throw in food, gas, spending money, do you know what you spend in an entire month? You’re not alone if you don’t know, and that makes it all the more important to pull last month’s debit or credit card statement and really go line by line to dissect the money that is leaving your account every month. As you look at each item you can really decide if they were important or could have been avoided, and then for fun, add up what your savings could have been if avoided. You will probably scare yourself.
Set a Budget
It’s actually shocking that two-thirds of the population don’t use a budget, so in this case, going against the norm could work for you if you are looking to allocate funds in order to stay within a spending budget. One way it could help curb spending would be to use cash instead of credit when it comes to your allotted spending money for the month. At least that way, once it’s gone it’s gone, you can’t overextend yourself, and maybe actually seeing the money leave your hands and go into the register could give you motivation to give purchases a second thought before proceeding.
Build an Emergency Fund
You never know what life will throw at you so it’s important to be prepared for anything. If you all of a sudden have a home appliance break down, let alone your car, have an unexpected vet bill, or the need to pay for expenses if you are in between jobs, giving yourself a cushion of a few months’ worth of expenses in an account for when you really need it, can help avoid putting on a credit card and risk taking you months to pay back.
Stay Out of Debt
Speaking of debt, when you charge throughout the month and your statement comes due, if you are not able to pay off that full balance by the due date you will begin to be charged interest, and depending on the APR on the card, not to mention the balance, can add a significant monthly payment to your budget and could throw the whole thing out of whack. If you are continuing to pay on a high-interest credit card then it may be worth looking into another credit card, or even taking out a personal or home equity loan in order to pay off the balance and have regular low-interest payments.
Don’t Miss Out on Free Money
When looking at other credit cards, you really seem to have your pick these days, and if you have great credit, lenders should be knocking on your door, as you probably receive offers in the mail daily, one of the best things to look at, not only interest, but the rewards. By making the purchases you were going to make anyways, with a rewards card you can earn points or dollars back to you that would otherwise be missing when using your debit or other credit card. This free money that you are leaving on the table could add up to hundreds of dollars a year.
Don’t Pay Attention to Others
Sure, we like to keep up with friends and family to not feel excluded, but when it comes to your finances and putting yourself in jeopardy of going into debt and setting you back in the future, it’s important to not pay attention to others and really ensure that you are living within your means. You don’t know what happens behind closed doors, so even those throwing around money could have debt piling up and hurting their financial future.