If you’re handling the household finances you might think you’re plugging along, making all the right decisions, but not a knock against you, but we all could use an improvement in this area. As we continue to get older it becomes more important to have a family nest egg to rely on when we reach retirement age, so it is the choices that we make up this point that make all the difference. In order to reach the money goal by retirement age it is always good to consult an accountant or tax professional to ensure you are maximizing your potential, but there are smart money moves that you could be making to do your best to have the right behavior and mindset to be financially independent, not to mention successful.
Be Prepared for an Emergency
As you have probably learned in your lifetime so far, you never know what life will throw at you, as there is never a set plan in motion, so it’s best for you to be prepared as best as you can. It is a good idea to have money available in an account so that you can pull out or transfer to your checking account when you have a sudden auto repair, medical bills, or even a few months’ worth of expenses to cover you during an unfortunate job-loss until you can get back on your feet again.
Continue to Increase Retirement Contributions
We cannot totally be sure that social security will be available to us by the time we are of age, so we cannot solely rely on that money being there and need to build up money ourselves. To figure out how much you need will depend on your personal situation, but the earlier you can contribute to a 401(k) or IRA the better to grow over time. If your company matches what you put in, at any limit, you should be at least be contributing that much, as otherwise that would just be leaving free money on the table.
Now you might be thinking to yourself how are you going to save up an emergency fund and increase contributions to retirement when money is already tight. Well, the short of it is, you have to, otherwise you will have nothing in retirement, so we need to find a way to cut expenses. These can be trimming down monthly utility bills, scaling down the house you live in or the car you drive, and probably the hardest part, reducing unnecessary expenses. For example, think about how often you go out to eat. If you bought groceries for a fraction of the cost and at your meals at home, that would free up a significant amount of money.
Take Advantage of Credit Card Rewards
Credit cards can be the financial death for some that maybe have a spending problem and rack up the bill and not being able to pay off the full balance. I’ve been there too. Although they used to give off a bad reputation when used, giving the impression that you don’t have the money, credit cards can actually make good financial sense, especially if you just count the rewards. By selecting the card with the best rewards, you can accumulate points or dollars just by making your normal purchases you would make anyways, so you actually benefit.
Create a Budget
Speaking of trouble with spending, if you need a little extra help when it comes to allocating funds to bills, food, gas, etc., a good way is to create a budget. This way with every dollar that comes in you can set aside money to go to spending and saving, with the hopes of having money leftover at the end of the month. It may take some tweaking along the way as you get more used to home much you are spending in each area, but it could be a huge help with the household finances.
Stay on Top of Finances
The money coming in should (hopefully) but a constant, to examine the money going out, a great way is to take the bank and/or credit card statement from the previous month and go line by line. This way you can see every purchase made, and start to put them in the “necessary” vs. “unnecessary” category. Add up all of the deemed unnecessary purchases that you made and see what you could have saved that month. It could be scary and shocking at the same time, and then going forward you can continue to adjust to maximize saving and minimize spending.