How to Take Control of Your Financial Life
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Taking control of your financial life is easier than you might think. It doesn’t require a pricey appointment with a professional financial adviser to nail down the basic steps of monetary planning. Follow these tips that can help you formulate a preliminary financial plan, help you figure out how to budget, allow you to start the process of responsible money management and, ultimately, lead to financial success.
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Work to maximize your debt payments to eliminate debt as quickly as possible and save money in interest over the long term.
The average U.S. household has more than $15,000 in credit card debt, more than $33,000 in student loan debt, and nearly $150,000 in mortgage debt, according to statistics from NerdWallet.com. One of the most important steps in taking control of your financial life is to solidify a plan to pay down that debt as quickly as possible. It’s imperative to stop acquiring new credit card debt that you’re not paying off each month.
If you’ve already acquired a large amount of credit card debt, pay more than the minimum balances due each month and if you can’t do that, at least make the minimum payments on time. If you’re carrying a large balance with an extremely high interest rate, consider a low APR credit card balance transfer credit card (but read the fine print). If you don’t qualify, consider a debt consolidation loan. Always do your research before opening any new line of credit.
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Construct a budget to avoid allowing your spending to get out of control.
Creating a budget not only allows you to see where your money is going each month, but it also helps you to be more financially responsible and aware of your financial standing. Calculate your monthly expenses and subtract that from your total monthly income to ensure you’re not spending more than you’re making. Identify areas where you could cut back on spending, such as dining out or entertainment. Are you really using that monthly gym membership? Is enough of your budget going toward savings? Even if you’re a good budgeter, it can be valuable to do a quarterly reevaluation of your spending and budgeting habits.
Avoid unnecessary late fees or penalty charges by paying your bills on time.
Use an account management and bill reminder service, such as Manilla.com, to receive automatic text or email reminders when your bills are due. One of the best ways to throw your money down the drain is to waste it on hefty late fees or penalty charges. They are completely unnecessary expenses that can deplete your bank account and may affect your credit score.
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Start or reevaluate your emergency savings fund to ensure you have enough money in the event of a crisis.
It’s essential that even just a small portion of your paycheck goes to your emergency savings fund each month. It’s understandable that, in this economy, you may not be able to put away 15 percent or even 10 percent of your earnings. But saving even just 2.5 to 5 percent of your monthly earnings can save you big tine over the course of a year and can help you in the case of an unexpected (and unfortunate) event, such as a family illness, natural disaster or other emergency.
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