Let’s not sugarcoat things; money is stressful, whether you have it, and have greater responsibilities that come along with it, or if you’re like most of us, you are not sitting on piles of cash and worry about making ends meet every month. Studies have shown that most Americans actually live paycheck to paycheck, so in order to break the norm and have a little cushion to sit on, it is time to make some changes. That does not mean you are doing anything wrong when it comes to paying bills or your credit score, but there are plenty of ways you can review your financial situation and make a few tweaks to maximize not only the present, but the future in your retirement years.
Time for Some Spring Cleaning
While you are finally able to open the windows to get some fresh air flowing through your house after a long winter, you start a throughout clean from top to bottom. The same can be said about your finances. While you may not have to physically have to throw anything away, unless your file cabinet is in need of an update, now would also be a good time to know where you stand in every account, giving a detailed look at current balances (saved and owed), and where you stand on your financial goals so you know where to make changes. It is good to review your goals and where you stand every so often so you are not treading water so to speak.
Take Another Stab at a Budget
Now if your New Year’s resolution was to have a budget and you have already failed, you are not alone. It’s tough to hold down a successful budget. It is so tough in fact that most of the American population actually do not follow a budget. That is including those that have tried and failed, or never even bothered. In order to put any sort of spending limit on your finances and have it nailed down to exactly where your money is going, it is good to have a budget instead of a spending free for all. The goal is to have more coming in, instead of going out, so the only way to do that is to reduce unnecessary spending.
Review Last Month’s Credit Card Statement
Speaking of spending, how is that going? If you can limit your purchases to a single card, it can be easier to track all of your spending in a month so you can see the necessary versus unnecessary charges. Now I’m not saying that you can never have fun; life experiences are important don’t get me wrong. I would never suggest missing out on anything, but if you can say a few bucks by not going out to eat every other day, that will add up so you can go see that concert or take that vacation in the summer. It’s not that you have to save every dollar, just have to be smart about purchases, so try and circle those purchases that could have been avoided and see how much that adds up to last month.
Are you Contributing Enough for Retirement?
Here is where it definitely gets tricky. I can probably answer this for you; no, you are not contributing enough for retirement. For you to fully enjoy your golden years without having to work and rely on Social Security that not only does not pay much, but may not even be there by the time we retire, you need to save a ton, and the longer you wait, the less it will compound build that balance. If your company offers matching 401(k), you should at least start there so you do not lose out on any free money, but beyond that, an IRA or even maxing out 401(k) should be the goal. I understand that can be difficult if you are even trying to get through today’s expenses, but starting small and building up gradually each year will help you to feel less of the hurt of not seeing your money now.
What if an Emergency Comes Up?
You hear the debate constantly about how much you should have in your emergency fund, if any. Well, think about if you had to fix your car for a thousand dollars, buy a new refrigerator for the same, or even worse, lose your job, how much would you need to not put it on a credit card so that you do not have to worry about paying it back. Usually it is recommended to have between three to six months’ worth of expenses on hand just in case.