While the first thing that may come to mind when thinking about curbing spending and improving your finances might not be that budgets are sexy, but there is definitely merit in tracking spending and putting together a budget. If you take a look at last month’s debit or credit card statement you can really get a feel of how much you’re currently spending, and where, and try and come up with where you want to get to spending, not only in monthly bills, but gas, food, and entertainment. Just think that retirement, although may be decades away, will come quickly, so it’s best to start preparing as early as you can, so if you can start making solid money moves now you can really reap the benefits later on when you do finally walk away from work.
Check Your Credit Report
These days you just really don’t know who could have your information. You hear often about card information being quickly stolen when you have it out, stores getting breached and leaking out customer information, and even a credit bureau that was hacked. It seems no one is safe these days so that makes it all more important to check your credit on a regular basis. The major credit bureaus offer a free copy of your credit report once a year, so that’s at least a good place to start to ensure all of your information is up to date and accurate.
Build an Emergency Fund
Much like having your information stolen can be out of your control, you never know what life will throw at you in terms of unexpected charges, so you need to be as prepared as you can so you can afford, not have to put in a credit card and risk going into debt, or worse, not being able to take care of what is needed. Whether it is medical or vet bills, auto repair, or needing to float for a few months after a job loss, it’s a good idea to give yourself a few months’ worth of expenses as a cushion, in an account, just in case the unexpected occurs.
Stay Out of Debt
I know this is easier said than done and tough times call for increased debt, but as a general rule, if you can pay the full statement balance on or before the due date, you can avoid carrying over a balance and paying any interest on the balance. The further you get into debt and are paying regular interest, which could be upwards of 16% depending on the card, making only the minimum payment will do little to the balance so you really need to make the largest payment you can afford every month until the balance is finally gone.
Use a Rewards Credit Card
Speaking of charging, if you are able to keep spending under control, only what you can afford, then you are currently missing out on free money if you’re not using a rewards credit card. By making the purchases that you would normally be making anyways, you can earn points or dollars back on charges. Now the rewards can add up quickly so once you see the impact of what you’re getting back you may be tempted to put tabs on your card to earn points, but if you get to a point where you can’t pay back the full statement balance and start getting charged interest, it would defeat the purpose of any rewards you would earn.
When it comes down to it, in order to really free up expenses you need to reduce expenses, and sometime that is making the tough choices. Taking going out to eat for instance. Sure, it’s great to have someone cook, wait on you, and clean up afterwards, but that comes at a price, and if you can go grocery shopping and prepare your meals at home, you can see savings in the hundreds of dollars add up pretty quickly.
Increase Retirement Contributions
As I mentioned, retirement may still be decades away, but that doesn’t mean you should put off preparing to have enough income when you do finally retire. Take a look at work to see if there are any company-matching contributions you could be missing out on, and by contributing the max of what they’re offering, you’re at least doubling what you would be doing, and would be huge over time. Beyond that, continuing to free up extra money and maybe increasing contributions a percent a year will help ease the burden by having more money leave your paycheck.