Tips to take control of your money in 2018
From: eLivingToday
Counting calories isn't the only way you can
resolve to bring about positive change in your life during the new year.
If you're like many Americans, it may be a good time to start counting
your way toward better financial health.
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The past year brought financial setbacks to nearly two-thirds of
United States households, according to a survey by the National
Endowment for Financial Education (NEFE). In fact, more than a quarter
of U.S. adults say the current quality of their financial lives are
worse than they hoped. Topping the list of setbacks in 2017 were
transportation issues (23 percent), housing repairs or maintenance (20
percent), and the inability to keep up with debt and falling behind on
bill payments (16 percent).
In an effort to reverse that trend, more than two-thirds of U.S.
adults will make financial New Year's resolutions for 2018, according to
the survey. Among those that plan to step up their financial game, top
goals include setting and following a budget (40 percent), making a plan
to get out of debt (39 percent), establishing savings (32 percent) and
boosting retirement savings (31 percent).
"We continue to see a lot of anxiety about money," said Ted Beck,
president and CEO of NEFE. "Three-quarters of Americans said something
causes them financial stress, and it's most often not saving enough and
debt that are to blame."
Reduce money stress and take control of your finances with these tips for financial success from the experts at NEFE:
1. Get debt under control. Take a hard look at what
you owe. If there's a clear warning sign of too much debt, take action.
Set a goal to reduce your debt load next year by 5-10 percent. That
might mean reducing impulse shopping. When you face temptation, delay
the purchase and give yourself time to consider whether it's a wise move
that fits within your budget.
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2. Save now and do so often. Preparing for
unexpected events like medical emergencies can help reduce the financial
impact of a life-changing event. Emergency savings can offset
unexpected costs and help you get back on solid footing. A good rule of
thumb is to have 6-9 months of income set aside. If that feels out of
reach, start with a smaller goal, even as little as $500. When it comes
to saving, it's also a smart idea to think long term. Review your
long-term savings and ensure they are on target for your retirement
plans.
3. Shop for better services. You may be surprised by
how much you can save when you periodically shop for the most
competitive rates on your recurring bills. Make a game out of shopping
providers to find the best value on your insurance policies, cell phone
plan, internet and utilities. Ask your providers about current rates and
any promotions available to long-time, loyal customers. Then look at
alternative providers to determine where you can trim some spending. Be
sure to understand your current offering thoroughly so that you are
comparing apples to apples.
4. Understand what's behind your financial decisions.
If you ever wonder why you feel good about spending money on vacations
but avoid saving for retirement, the answer may lie in your unique
values and how they influence your financial decision-making. Consider
taking the LifeValues Quiz at smartaboutmoney.org, where you can also find help with setting goals and getting your finances in order.
Budget Better
To take control of your money and your financial life, it's important
to get organized. The most effective tool is a budget. Creating a
budget can help you meet personal goals such as buying a house or car,
or taking a vacation. It also can help you prepare for emergencies and
manage debt.
Income: Start by listing all income sources,
including wages, bonuses and tips, as well as non-employer income such
as child support, alimony or Social Security. Generally, you'll want to
look at your recurring income, but also include long-range, infrequent
income that you anticipate, such as tax refunds.
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Expenses: Next, take into account all of your
recurring monthly bills. If you have major periodic expenses, such as a
six-month auto insurance premium, account for it in monthly increments
so you can save up and have the money ready when the payment comes due.
Remember to account for the bills you pay (mortgage or rent, utilities,
etc.), as well as unspecified items like lawn maintenance and personal
hygiene purchases.
Categorize Spending: Some people find it helpful to
break expenses into categories, such as housing, transportation, health,
personal, entertainment and so on. The key is to capture every point
where money is going out so you can get a thorough picture of your
ongoing expenditures. It can take a couple months to get a true
understanding of what your typical spending looks like.
Savings: An effective budget doesn't just capture
what's going out; it also reflects what you're able to keep. If you
haven't already, outline a savings plan that allows for an emergency
fund, regular savings, retirement and investments.
Debt: Consistently paying down the accounts you owe
with the maximum amount you can afford is the surest way to reduce your
debt load. Account for each debt you owe in your budget, and establish a
payment plan that shows how much you can allocate to each account each
month.
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