A Beginner's Guide to Staying on Top of Finances
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Everybody wants financial security in their lives, and proper money management skills are essential if you want to achieve this goal. Unfortunately, many Americans are lacking in this area. Seven out of ten adults are concerned about their personal finances—and more than half spend without adhering to any kind of budget, which can indeed lead to money woes. Don’t make this mistake. From tracking your spending with an app to improving your credit score, we at Marcus H. Herbert & Associates offer the following guidelines for best practices when it comes to planning, spending, and saving your dollars.
Create a budget
Do you find yourself coming up short financially at the end of the month and wondering where all your money went? A budget will solve the problem. Creating a budget isn't complicated. First, calculate your expenses. Write down a list that covers everything from your rent and utilities to food and entertainment costs. Then, determine your income from all sources such as salary, rental earnings, and alimony. Reevaluate your spending based on these figures, and allot a set amount of money for your necessary expenses every month.
Think big picture when it comes to investments
When you create your budget, plan to set aside a certain amount of money each month for savings with long-term investment goals in mind. For example, many Americans dream of owning a home one day. If homeownership is a goal of yours, start setting aside money now. You will likely have to take out a home loan to cover the costs, but if you can make a larger down payment upfront, you’re more likely to secure a lower interest rate.
When you set up your savings, opt for an automated savings account. Doing so can bring peace of mind knowing that your savings are automatically growing. Many accounts also institute penalties if you attempt to make an early withdrawal, so your money grows and you are motivated not to touch it.
Use technology to track spending
If you really want to stay on top of your budget, you need to keep track of your spending. Thanks to modern technology, it’s easier than ever to see where your money is going. Download a tracking app to hold yourself accountable. There are many options available. For instance, NerdWallet votes YNAB as being best for people who are hands-on users, while Mint is designated as the gold standard. Find one that you like and that has features that fit your lifestyle so you feel encouraged to keep up with your tracking.
Build up good credit
When you approach the time to make big-ticket purchases, odds are you will have to take out a loan. Whether it’s a car or a house, lenders will take a look at your credit score to determine if (and how much) they want to lend you. As the Federal Trade Commission explains, a high credit score is good and indicates to the lender that you are likely to pay the loan back, making you less of a risk. Start building up good credit by getting a credit card and using it regularly, always paying off the minimum monthly balance due (at the very least).
Follow these tips to financial literacy, and you will be able to manage your money like a pro, sparing you stress down the line. You won’t be suddenly faced with the prospect of being unable to get a loan, for instance, or of having zero savings to dip into. With some effort, you will be able to get a handle on your finances.
At Marcus H. Herbert & Associates, we can help you overcome your financial troubles. Schedule a free initial consultation with us by calling 270-443-0303 or submitting a contact form.
