If you’re not already doing these 5 smart things to improve your finances, start doing them today. It will take a small amount of effort on your part to set it all up, but once you’re done, it will be smooth sailing from there, and you’ll be amazed at how much money you can save for the future.
Before that it is essential on your part to do research about the best financial decisions to make The benefit of research is that you will get a basic idea how to move about your finances.
To that end, here are five of the smartest things to do for your money.
- Start with an emergency fund: A rainy-day fund is an essential part of any financial plan. The idea is to set aside enough money to cover about six months’ worth of living expenses in case you lose your job or have another income disruption. An emergency fund can keep you from having to sell investments at a loss or take on high-interest debt when something goes wrong.
- Pay down credit card debt: Credit cards have notoriously high interest rates, so carrying balances can be devastatingly expensive over time. If you’re not able to pay off credit card bills in full each month, at least make more than the minimum payments and work toward eliminating them as fast as possible. Debt is a poison that erodes away at our wealth, prevents us from saving enough for retirement and causes major stress in our lives. It’s important to understand how much debt we have and what interest rates we’re paying on that debt so we can prioritize which debts to pay off first. Paying down high-interest credit card debt should be a top priority because those interest rates are much higher than the ones we might earn on investments (in our retirement accounts or taxable investment accounts). Once we’ve paid off credit cards, then we can move onto other.
- Build up your retirement savings: When it comes to retirement investing, compounding interest is your friend — and time is its partner in crime. The earlier and more aggressively you invest for retirement, the less risk you’ll have to take for those assets to grow into something substantial.
- Get a real-time snapshot of your finances: The first step to improving your finances is to understand where you currently stand. There are several online tools that can help you with this. Use a budgeting tool. Tools like Expensify (NASDAQ:EXFY), YNAB, or Personal Capital can give you a real-time snapshot of your finances by connecting to any accounts (bank, credit card, loan, investment) that you may have. They will automatically pull in your transactions and tell you exactly how much money you are making and spending every month. Track your net worth over time. Your net worth is the value of all of your financial accounts (bank, brokerage, 401k, etc.) minus any debt that you owe (credit cards, loans). The first tool mentioned above will also do this for free. But if you want a more detailed picture — including a projection of what your net worth could be in the future — there are also plenty of other sites out there. Just make sure they’re secure before entering any personal information!
- Improving your credit score: Pay your bills on time. If you’re having trouble paying everything on time, try calling creditors and asking them if they’ll accept lower payments for a while. They might not agree, but if they do, it will help keep late payments off your record. Check for inaccuracies in your credit report and dispute them immediately with the bureau that issued them. You can follow up by disputing them with the business or organization responsible for reporting inaccurate information — but be sure you have documentation to prove there’s an error, since businesses are only required to investigate disputes if they receive proof backing up the claim that there’s an inaccuracy. When it comes to improving your finances, don’t assume that there’s only one right way to do it. A lot of things we think of as money-saving tips and tricks actually end up costing us because they’re not sustainable. Instead, follow a combination of the mentioned five smart things you can do that will help you achieve financial success in a way that works for you and your personality.
The five smart things we’ve suggested above are only the beginning of what you could do to improve your financial situation. There’s plenty more, and while they won’t be easy, they’re all worth doing.