During changing economic times it’s common for many to experience financial change and stressors. Whether you’ve lost a job, are currently employed, or searching for a new role, financial stability remains vital for all to enjoy the simple things in life while planning ahead for the future. Check out these four simple tips to get on track with your personal finance and never make the common financial mistakes everyone does.
The first step to keeping your finances aligned to understand boundaries. Imagine a race car. Drivers of these machines must understand their track, gas intake and emissions, and speed to properly navigate their course.
Personal finances are no different. In order to determine how much you can spend per month (just as a track determines the driver’s course), you must craft a budget. You can create a budget on your computer with a simple Excel spreadsheet or with various printable templates.
When crafting a budget, account for your monthly expenses, such as food, bills, gas, and other reoccurring payments. Then factor in your sources of income to determine how much you can spend per month after accounting for a portion of savings (see point number 2).
Just as cars can change tracks, budgets may too change over time. Having a solid budget in place will allow you to adjust and accommodate for increased/decreased incomes and lifestyle changes.
personal finance tips
2. Habit of Saving
No matter how big or small your paycheck is, it’s important to dedicate a portion each month to savings. A habit of savings is a necessity to contribute to a larger savings fund for security, retirement, emergencies, and rainy-day funds.
Make sure to create a separate savings account with your bank to keep checking and savings distinct. Most experts recommend saving at least 20 percent of your paycheck. Get in the mindset after each payday to immediately transfer an appropriate percentage of funds to your savings account.
3. Manage Debt
Responsible finance also involves taking control to reduce and eliminate any debt you may have occurred. If you are currently in debt, get a monthly plan in place to work on payments over time. Or consider talking to a professional like Don Gayhardt to discuss your concerns. To prohibit future debt, be smart about loans and other long-term payments so you can live debt-free.
The fourth step to smart personal finance is to diversify your assets. You can invest in the stock market, your employer’s 401k, or even real estate property. Some consider flipping real estate properties or small homes to make extra income.
Also, consider how to make an extra income on the side of your day-to-day gig. Play into your passions and consider picking up a side hustle to earn some extra cash on the side. You never know, a part-time passion may become a full-time career someday!
Another way to diversify your assets is to invest in yourself. For instance, if you are a registered nurse, you can look for an RN to BSN program to increase your earning potential and job security. Higher education can open up more career opportunities and provide a competitive edge.
Take some time to review your current financial situation and put a plan in place to take control of your personal finances and savings. With a little examination, budgeting, and diligence, you too can achieve smart personal financial peace!