Good money management is the backbone of having healthy finances. Whether or not you’re currently facing financial struggles, it is always a good time, and a good idea, to learn about the best money management practices.
Adopt the following 5 Money Management Tips into your financial habits!
- Review your budget.
Review your budget to make sure it is aligned with your priorities. What are your financial goals? What matters most to you?
- Is it more important to you to have the shiny new waterproof Samsung Galaxy that just hit the market or to take a long weekend exploring The Wizarding World of Harry PotterTM?
- Is it more important to you to pay off your credit card bill or to stash that money away in emergency savings? (Side note: everyone should have an emergency saving – experts recommend not less than 3 to 6 months of living expenses.)
- Are you more interested in cooking classes than spending your money on takeout?
Your budget is meant to work with your needs and wants. Recognize when those change, and adjust your budget accordingly. Review your budget regularly and tweak it when necessary.
If you do not have a budget, it is time to make one. Sticking to a budget empowers you to be in control of your finances. Peruse our article The Benefits of a Budget and Sticking To It for budget basics!
- Set specific savings goals.
If you are not specific and clear about your goals, it is unlikely that you will achieve them. When it comes to savings, we urge you to set specific savings goals.
When you are first building your savings, an excellent goal is to save a specific percentage of your income. If you have steady, predictable income, then you will know exactly how much money you will save over the course of a year.
Specific short-term savings goals ideally will take a year or two to achieve. These may include:
- Building an emergency savings fund equal to 6 months of your living expenses.
- Paying down debt.
- Saving for a vacation.
Specific long-term savings goals will take longer than a few years to achieve. These bigger goals require a specific plan, which includes a long-term commitment to sticking to your budget. Long-term savings goals may include:
- Saving for a down payment on a house.
- Saving to purchase a new car without taking out a car loan.
- Paying for your child’s education.
- Saving enough for a comfortable retirement.
When setting your specific savings goals make sure to set the dollar amount! The goal to “save for a down payment” is too elusive. The goal to “save $50,000 as a 20% down payment on a $250,000 house” is a concrete goal.
- Make sure you have adequate insurance coverage.
An important aspect of good money management is making sure your money is protected. Review your insurance policies and make sure your coverage is adequate to protect you and your family in the event the unexpected happens.
Insurance policies to review (or consider purchasing) include homeowner’s or renter’s insurance, automobile insurance, life insurance, health insurance, disability insurance, a blanket policy, and an umbrella policy.
- Stay serious about retirement.
The amount of money you will need for a comfortable retirement depends on many variables, such as where you plan to live, your health, and your preferred lifestyle.
For years financial advisors made a blanket recommendation that people save at least $1 million to enjoy a comfortable retirement. However, people are now living longer life spans — which is a blessing, but also requires more funds to cover living expenses, and often additional health care expenses.
As your salary increases over the years, so too should the amount of money you are putting toward your retirement. A good goal is to put 15% of your income into retirement accounts like a 401(k), 403(b), or a Roth IRA. If this percentage is unreasonable for you, then save a lower percent — just make sure you are diligently saving for retirement.
- Make paying down debt a priority.
Here’s the deal with debt: the longer you carry debt forward, the more the debt costs you to pay off and the longer you are hindered from working toward your other financial goals.
If you are carrying credit card debt or student loan debt, put everything you can toward paying off these debts each and every month. Every month you remain saddled with these debts, is another month that you are accruing interest charges and preventing you from saving (and responsibly spending!) your money on other goals.
When it’s time to consider bankruptcy.
If you cannot reasonably pay off your credit card debt, medical debt, or other unsecured debts within three years, then it is time to consider bankruptcy.
If your credit cards are maxed out and you are only making the minimum payments, or if you are not making the payments at all, then it is time to explore if bankruptcy is your best debt relief option.
Here at the Law Office of Barbara B. Braziel we are committed to helping people get out of debt and gain the financial freedom they deserve. We invite you to learn more about who we are here. If you live in Savannah, GA or the surrounding areas and have questions about your debt relief options, let’s meet for a free consultation.
Bankruptcy is a powerful legal tool that can help you in many ways. To further explore if bankruptcy is the right solution for you, read our articles:
- Debt Management vs. Bankruptcy
- Living With The Stress of Debt vs. Bankruptcy
- Do Not Borrow Against Your Retirement to Fund Debt Management
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We proudly serve the people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.