Top 5 Money Tips for Financial Success
Stick to Your Budget
A budget doesn’t just mean tracking what you’re spending. In addition to essential expenses your budget should also include financial priorities and lifestyle choices. The benefit of a budget will help you to determine not just how much you make each month, but should give you a clear view of your debts, leftover money, cash flow and alert you to any potential money challenges. This is also a good place to list out some financial goals to keep you motivated.
Financial Planning Process
20/30/50 & 28
Ideally, 20% of your income should be placed into savings, either for the purpose of keeping an emergency fund or for paying off debt or other goals, such as retirement. 30% of your income will most likely be applied to lifestyle choices, such as going out to eat, spending time at happy hour after work or any of the fun travel adventures you take with your family. Lastly, 50% of your monthly income should be designated to essentials, such as rent or mortgage, utility bills, transportation the key things you need in order to survive such as shelter, food and water. Another number to keep in mind is that your residence expense should never be more than 28% of your total monthly income.
Make a Financial Calendar
Whether you own your own business or work as a full-time employee with benefits it’s important to set reminders for yourself of important dates, and I’m not just talking about April 15. Some important money matters to enter into your date book are yearly credit report checking, quarterly taxes (for 1099’s), savings budget milestones, update your net worth, and check your current interest rate availabilities. You are setting financial goals, right?
Know When to Invest
Many people look at investing in areas such as home improvements on a property they wish to sell, starting a small business or maybe they want to take advantage of that insider stock tip their cousin gave them. In any case it’s best to have a few key financial milestones reached before branching out to ventures that could put you at risk financially if they don’t pan out. If you are currently using less than 30% of your total credit limit, have at least six months savings in an emergency fund, and are meeting your monthly budget expectations then it could be a good time to consider investing in other opportunities. This could be a great way to work towards your financial security in a responsible way.
Keep The Black Knight (Debt) at Bay!
Even if your debt is out of control, start by tackling the smaller sums and working your way towards taking chunks of out the larger ones. By paying off those small debts first you’ll find yourself more confident and able to begin focusing on the cards with the highest interest rates. Besides the typical credit card debt, it may be worthwhile to consider getting rid of that overdraft protection plan you have with your bank or credit union. While it sounds appealing, it’s simply a way for banks to charge you ridiculous fees for overspending, such as when you might accidentally go over your limit by as little as $5, but are hit with a $35 bank fee for that, which immediately then makes you negative $40 in the hole to your bank.