How to Save Money and Get Ahead with Financial Planning
© by Jennifer McLeod writing as jenjen0703, all rights reserved.
Making Sound Financial Decisions
Financial planning is a reality for people, and making healthy financial decisions is critically important during our current economic conditions. Many Americans find themselves working hard yet unable to make ends meet each month. Certain debts are unavoidable, but using common sense while making financial planning decisions will help cut costs, lower interest rates, and earn more money on investments.
The goal of personal financial planning is to set goals for the financial future and successfully achieve those goals, such as:
1) Buying a home or other major purchase
2) Supporting a family, especially if it is growing
3) Planning for reitrement
4) How to manage credit card debt
5) Ways to pay for your children's college educations
Evaluate Your Financial Situation
It is easy for some people to apply for another credit card, take out another car loan, or buy a house that might be out of their budget financially. Some people enjoy certain luxuries in life but do not think about how they will pay their bills if they were to find themselves in a situation where they may not be able to work or pay their bills. Making enough money to pay the bills each month is not enough. Financial planning for the future, cutting costs, and saving money are ways to get ahead and stay ahead of financial problems.
Before making a major purchase, it is important to evaluate your current financial situation. Collect all your financial information and organize it all, as this will help when working on a budget. Create financial statements and record your debts and assets. Use these to evaluate where you can save money. Everyone has things they spend money on that they can live without. Decide what areas you are willing to stop spending money and be willing to adhere to your new budget.
The workbook to assist you with the listed book.
Simple Tips to Stretch Your Dollars
1. Prepare for emergencies with a cash reserve. Set aside an amount of money intended only for emergencies. If Junior breaks his arm and the bill costs you $400, you might not have the money available in your checking account. Having a cash reserve provides you with a quick solution to some financial emergencies.
2. Balance your checkbook. Many people use their checking accounts to pay for most of their expenses. It is easy to be in a hurry and tell yourself, "I'll balance the checkbook when I return home." Take a moment to enter each purchase into your checkbook register before you leave the store so you do not lose track of your balance. Also, do not use the ATM machine to check your account balance instead of balancing your checkbook. The balance shown by the ATM will not reflect a proper balance if there are pending transactions waiting to be processed.
3. Pay your bills on time. Most bills will have a late fee added to it if it is not paid on time. Avoid paying late fees and pay your bills on time. Not only will this help you avoid paying late fees, but it will help your credit rating. A higher credit rating means lower interest rates on loans, insurance premiums, and no annoying calls from the bill collectors! If you are anything like me and struggles to keep track of a calendar, consider automatic bill payment.
4. Put some money into savings. Choose an amount of money you want to deposit into your savings account and stick with it. Each time you are paid, make that deposit first, before you pay for anything else. This will help you stick to your personal financial plan.
5. Banking. If you are already a member of a financial institution, consider investigating other financial institutions. They might have better interest rates on their accounts and could help you earn more back on your money or they might offer lower interest rates for loans.
6. Consider refinancing options. If you have a mortgage or car payment, consider refinancing them as this could lower your interest rates considerably.
7. Invest money into CD's. A CD is a savings account that pays a stated rate if interest for a certain amount of time if you do not touch the money during that time. The downfall of CD's is that they are not highly liquid because you cannot access the money immediately. CD's are an excellent idea for people who have some extra money to put away and can afford not to touch it. A rewarding way to manage CD's is to layer them into a laddering effect. For example, instead of putting $10,000 into a CD that matures in 5 years, put $5,000 into a 5-year CD, $3,000 into a 2-year CD, $2,000 into a 1-year CD, and the final $1,000 into a 6-month CD. Laddering CD accounts allows some of your money to mature sooner so you do not have to wait a long time to have access to it.
8. Cash back at point of sale using debit card. If you need access to money and are not near your bank or one of their ATM machines, consider making a purchase and using your debit card to request cash back at the point of sale. ATM machines charge a fee to use them, so if you are going to spend $3 or more to take money out of your account, consider spending that $3 on a gallon of milk for your children and ask for cash back instead. This is convenient if you only need a small amount of cash, usually under $100.
9. After-season and after-holiday sales. This tip is one of my favorites and I am guilty of doing this after holidays. Once a holiday or a season is over, stores sell their merchandise at drastically lower prices. Shopping at the after-season or after-holiday sales is an excellent way to stock up on items you know you will need the following year. For example, Walgreen's carries a stock of Victorian houses and figurines, and I buy some every year to add to my collection. Once Christmas is over, I keep an eye on their prices, until they reach 75% to 90% off. Once this happens, I stock up on wrapping paper, bows, more Victorian houses and figurines, Christmas cards, and many other items.
10. Keep a miscellaneous change jar for extra money. When I am walking and see change on the ground, I pick it up, even the tails up, bad luck pennies. Keep a jar for this money and add to it for a year and count it. See how much money you accumulated. I also pull over and pick up soda cans and beer bottles and add that money to my change jar. One summer, we made almost $150 just in cans and bottles we picked up off the road.
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For more information on ways to save money, check out Price Slashing: Buy More for Less