Whether you are plugging along month after month or if you have strayed a bit and thrown off your personal finance a bit, there is always room for improvement to get to the ultimate financial goal, which is to not waste money away on careless purchases and maximize savings to live off during retirement. No matter where you are at in your career, it’s best to start saving as early as possible, because every year that goes by that you are not saving, there is that much less money to grow over time. We are not certain that social security income will be there in the future, so it’s important to save as much as we can on our own to be able to draw off when we most need it.
Reduce Unnecessary Expenses
Now there is necessary spending that occurs in the month such as well, bill, but on top of that you also need food, not to mention filling up the gas tank. After that, becomes spending money and that’s where things can get tricky. If you look at everything outside of what’s necessary, take a look at last month’s credit or debit card statement and add up every purchase that could have been avoided and see what the damage is, you will probably be shocked. One area to work on eliminating is going out to eat, which can be considerable spending compared to buying groceries and eating at home.
Build an Emergency Fund
Not that you want to think of something bad occurring, but what if you had your car break down, or a home repair, or even worse, a job loss, how would you pay for that? If you are now living paycheck to paycheck you will have no choice but to put on a credit card and put yourself into debt, taking months if not years to pay back. If you can put a few months’ worth of expenses in an account to sit in case of an emergency, you could be in good shape if you get hit with a large unexpected charge.
Pay Off Debt
Speaking of debt, probably the worst hole you can put yourself in is going into debt. Using a credit card is not a bad thing, but if you can’t pay off the statement balance by the due date, you start to carry a balance over each month, paying interest, therefore spending now more money each month to pay back what you have been spending. Reducing unnecessary expenses will do wonders to keeping spending low, so hopefully you will be able to pay off any debt and remain debt free going forward.
Take Advantage of Credit Card Rewards
Staying on the topic of credit cards, one of the best features of charging is, depending on the card, getting back rewards dollars or points based on your purchases. If your card does not offer any sort of cashback then it’s time to look for another credit card as there are so many that you can earn money back on just making the normal purchases that you would be making anyways. I have cut off using my debit card and only use credit for that reason, however it does take willpower to stay on track and not go on any spending spree.
Save for the Future
It probably feels like just yesterday that you were out of school and getting your first job and now look where you are, and time sure does fly by. Retirement may be the furthest from your mind at this time but it will continue to fly by, so much in fact that if you do not make saving for the future a priority then you may end up with nothing when you do finally retire, and you will either have to live off social security, which hopefully it’s there so you can at least live off some sort of money coming in.
Create a Budget
Now that you are continuously looking to cut monthly spending and maximize saving for the future, you can look to free up a little more by setting a monthly spending limit and have a budget for the household, where you try and set aside and allocate a certain amount of money for each expense. Since the household finances are spent as a team, it should also be you and your significant other working together to stay on track, or even a family member or friend that you trust to give their valued opinion as well.