Financial success is something that seems a far-fetched dream to some people at the moment, because of all the debt a person has accumulated over the years. Many people nowadays are living a hand-to-mouth lifestyle, risking the possibility of financial bankruptcy, if anything was to happen to their source of condition. It might be understandable that right now there is nothing you can do, but try as much as possible to get out of that situation as soon as possible. The keys to financial success are nothing major, but making changes in a few areas of your life. The following article by Catherine Durkin Robinson, even though it was done at the beginning of the year, is applicable at anytime, and gives clears areas of ways to achieve financial success.
A new year brings with it many resolutions. You might think about dieting or exercise, but what about your financial situation? Changing bad habits and forming new ones is good to do no matter the time of year, but many people find it easier to make such changes at the beginning of a new year. Nevertheless, whenever you make the change, you’re going to need some guidance. Here are ten ways to improve your financial situation.
Know your worth and spend less
It’s simple, but true. You want to stick to this mantra more than anything else. Know what your job is worth in the marketplace, both locally and on a national level. Conduct an honest evaluation of your skills, how productive you are, most common tasks at work, how you contribute to your company, and how much others are getting paid for similar positions, whether inside or outside the company for which you work. If you are underpaid hundreds of dollars every year, this adds up over the years, and can have a significant impact on how you are earning a living down the road.
No matter your salary, you must learn to live within your means. In a struggling economy, you will find it easier to spend less, than to go out and get a job that pays more. Small cost-cutting efforts in certain areas of your life can save you big money. It doesn’t always have to mean huge lifestyle changes.
Create a budget and then stick to it
This is something everyone should do. It’s the key to financial freedom. If you have a family, get them involved so that everyone knows what they’re working toward. You cannot possibly know where your money is going if you don’t budget it. This helps you to understand how much is coming in and how much is going out each month. Creating a budget allows you to set spending and saving goals, because you can see everything you owe and prioritize which bills get paid first.
Pay off bad debt first
Credit card debt is the main reason why people find financial freedom out of their reach. It’s too easy to reach inside your wallet, and grab a credit to make impulse purchases. You might tell yourself the bill will be paid in full when it’s received, but the fact is that more often the balance is carried from month to month. Interest grows on top of the balance and before you know it, you are paying a lot more money than if you’d just used cash in the first place.
Contribute to your retirement
The best place to put your money, especially pre-tax dollars, is an employer-sponsored retirement plan. If your employer matches funds, then you really must contribute as much as possible. Find out about your company’s policy, and sign up today or during open-enrollment. If you’re already contributing, consider increasing your contribution. If you aren’t eligible or are self-employed, look into an IRA and start putting money away for retirement today.
Save your money
Pay yourself before you pay anyone else. It’s easy to put off, especially if you have bills that are piling up, but the longer you wait to save, the harder it is to get started. Start small. Put aside at least 5% of your salary and them work up towards 10%. You might even consider getting the money automatically deducted from your paycheck before you even see it. Work toward the goal of having six to ten months of savings set aside for an emergency.
Invest your earnings
A retirement plan and savings accounts are good ideas. Think about other future goals or events that will require a lot of money. College plans for your children, weddings, bar mitzvahs are all huge events that often put parents into debt. Invest wisely and plan ahead. Then you won’t have to borrow from someone else.
Take advantage of your benefits at work
Retirement plans, flexible spending accounts, medical and dental insurance are just a few of the many ways that your job’s benefits contribute to your financial bottom line. Don’t hesitate to maximize these benefits, and any others that save you money by reducing taxes and expenses you pay out of your own pocket.
Go over your insurance
Is it meeting your needs? You don’t want to pay too much for life and disability insurance by adding to existing car loans or buying life insurance when you have no one depending on your income. Sometimes whole-life insurance policies make sense, but other times term-life is a better choice. Do the research yourself and find out what you need. If your dependents rely on your income, it’s important to have good insurance to protect them.
Update your will
You need a will, especially if you have dependents. This isn’t something that only wealthy people need. Besides, if your situation isn’t complicated, use a software program that will answer all the basic questions for you, and help you protect your loved ones.
Keep updated records
A good record keeping system will allow the organization needed to claim all allowable income tax deductions, and credits. Create a system that works for you now and then stick to it all year. This is easier and financially more rewarding, than freaking out come tax time and finding you don’t have everything you need.