The average American household has over $130,000 in debt. Just under $16,000 of that is in credit cards. Let that sink in for a minute. Over 100K in debt.
Financial security is something we all aspire to attain but is sadly easier said than done. The average cost of living has increased at a pace that surpasses income levels by 26% in the past 12 years making it difficult for the average Joe to get a grip. These top 10 money tips will give you some helpful do and do not’s of managing your money.
Good luck.
Financial security is something we all aspire to attain but is sadly easier said than done. The average cost of living has increased at a pace that surpasses income levels by 26% in the past 12 years making it difficult for the average Joe to get a grip. These top 10 money tips will give you some helpful do and do not’s of managing your money.
- Learn how credit cards work. Credit card companies make their money off of you not being able to pay your balance. This is why they extend you a line of credit and charge interest on payments. Credit card companies are not, by their nature, evil but let’s just say they don’t exactly want you to be able to pay on time. Bank loans work under the same principle: we’ll lend you this much money but you’ll pay us back all of it plus more. Consider this when charging something you know you can’t pay back immediately.
- Learn how to budget. Chart your monthly expenses and earnings. See where you stand. Make a plan and see where you can get back on expenses. Pay close attention to monthly subscription based services such as cable television, cell phone plans, or gym memberships. Those three combined can be costing you a few hundred dollars a month. If you don’t use all of the data in your cellphone plan, cut back. If you don’t watch television that much, cut back, etc. You can save yourself literally thousands of dollars a year just by going through these items and reducing your costs where you can.
- Learn to Save. If only a little bit. Most Americans, 56% to be exact, have less than $1,000 combined in their checking and savings accounts. Remember the old saying: A penny saved is a penny earned. It typically costs nothing to open a savings account in a bank or credit union. When you write out your budget plan, budget a small amount to go into savings and leave it there. Is that 10% of your paycheck? 1%? Whatever it is, plan to save.
- It’s never too early to think about retirement. Even if you’re living comfortably and debt free (congratulations by the way), it’s never too early to think about retirement. All major financial institutions have retirement savings accounts such as IRAs. Accounts such as these have the added bonus of being basically untouchable (except for specific circumstances) without incurring severe penalties until you reach retirement age. Save, collect interest, and feel secure.
- Live within your means. Part of doing your budget is being realistic about your earnings and your spending ability. Sure, you might have a credit card with a $10,000 spending limit but that doesn’t mean you have to spend all 10 of those G’s. Don’t overextend yourself.
- Learn the difference between a necessity and a luxury. You need food, water, electricity, etc. You do not need the latest video game system, a new set of golf clubs, or a luxury car. When deciding on a major purchase ask yourself: “Do I want this? Or do I need this?” Most of the time you’ll find it’s the first one.
- If you have debt, plan to get out of it. If you’re one of the millions of Americans living with debt, look at it as a challenge that needs a clear solution. Don’t be afraid to consult with a debt specialist or financial planner when doing your budget and they can help you form a plan to pay off your debt in a way that works for you.
- Invest in yourself. This tip comes from the man who knows a few things about money, Warren Buffett. You are your own biggest champion. When considering what to spend your hard-earned money on, consider things that put you in a better position to earn. Professional training, career certifications, etc. Investing in these things now can help you earn better tomorrow.
- Don’t be afraid to cut your losses. Taking calculated risks with investments or business ventures can pay off big down the road but not every startup will turn into Facebook and not every stock will pan out. If it’s time to get out from under a bad investment, be prepared to cut your losses. No one wants to lose money but consider the difference between losing a lot or a little. This is why they say of casino gambling: the longer you play, the better the odds are for the house.
- Be careful who you listen to. When it comes to money, everyone has an opinion or a tip or a great idea but pay close attention to where the advice is coming from. If your advice is coming from friends or family members who always seem to be broke, they’re probably not the best source of information. Likewise, your bank and credit cards obviously have ulterior motives for giving out advice as well.
Good luck.
