Taking care of the household finances is a good in itself. Between the money coming in, paying for necessary expenses, a little spending money, and hopefully saving, there probably isn’t much left, which is why you always hear about living paycheck to paycheck. I’m sure over the years it’s taken a family member or friend that you can trust in order to guide you in the right financial direction, not to mention a professional, so that hopefully by the time you have a family of your own you can start to give your children financial lessons early enough on so they can make good choices as they get older and hopefully not make the same mistakes you did, although it did ensure that you learned your lesson.
Keep Track of Purchases
The best way of seeing every dollar that goes out is to pull out last month’s debit or credit card statement and actually go line by line. This way you can then take a step further and label the purchases that probably could have been avoided, and which were necessary, so if you can add up those that were unnecessary, it could be scary how much leftover you could have in your bank account. Once you start actually looking at every purchase you made, it may make you give second thought on spending money and could free up extra money every month.
Build an Emergency Fund
You never know what life will throw at you, so you could be plugging along getting by every month with your finances and then all of a sudden everything goes out of whack when you have an unexpected vet bill to pay for, or your car suddenly breaks down. If you did have a major expense come up out of nowhere, how would you pay for it? Likely a credit card, then you are stuck making payments with interest until the balance is finally gone, which probably then put a dent into your savings. If you can put a few months’ worth of expenses into an account, you can give yourself a little cushion if any unexpected charges do come up.
Stick to a Budget
If you look to tightening up spending, a budget could be the way to go. By allocating funds out into necessary monthly bills, food, gas, entertainment, you can then hopefully open up extra money to put into savings or retirement that you were probably lacking previously. When it comes to spending money, try using cash instead of credit, so that way once the money you have spent is gone, that’s it until next paycheck.
Keep Your Eye on the Prize
It’s good to have goals in all matters of life, whether it’s joining a gym to try and lose a few pounds, reaching a savings goal, or keeping spending to a certain dollar amount. By having a goal with your finances, you can keep your eye on the prize and not distract yourself with impulse purchases and unnecessary spending. After all, any extra money you have in your bank account likely will get spent, so it’s a good idea to have a plan for every dollar that comes in so you can put your hard-earned money to good use instead.
Open Conversations are Necessary
I don’t claim to be an expert, and you probably aren’t as well. That’s ok, but the point is that we always don’t have the best answers, so we can certainly open it up to family, friends, or professionals for the right advice. When it comes to handling the household finances, it shouldn’t be a secret, so if you’re sharing with a significant other, if they are spending and saving the same money, then they should be brought into conversations as well to make sure that goals are still on track, budgets are still being followed, and retirement savings are on point.
Don’t Forget About Retirement
Last, but certainly not least, is retirement. While it may still be decades away from retirement, the earlier you can start saving, the better, so your nest egg will be able to grow over time, so beginning with your first job, start with the retirement contributions, no matter how small, and continue to grow from there. Take a look at work to see if your employer offers company-matching contributions, otherwise you could be leaving free money on the table every year that could have the opportunity to grow to tens of thousands of dollars by the time you are of retirement age.