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Smart Ways to Get Finances on Track

Holding down the finances is no easy task, probably why most Americans are in debt.  Now that is a very vague statement, and each situation is different, but I would seriously doubt that most are watching every dollar that comes in and goes out, to ensure minimum spending and maximum saving.  If that were the case, then everyone would have ample savings for retirement, which we often hear is not the case.  No matter the situation, handing the household finance is an important job and is not to be taken lightly.  Wherever you are in life, it is a good idea to do what you can to get your finances on track, so that you are maximizing every dollar that is coming in, going out, and at good use.

Have Available Funds in Case of Emergency

You never know what can happen in life.  Just when you think everything is going smoothly you could need a major auto repair, have expensive medical bills, or even worse, lose your job, which could set you back for months.  In order to be prepared for this possible setback without throwing on a credit card and putting you into a debt that you will not be able to pay back, it is good to have a few months’ worth of expenses sitting in an account to be able to pull in an emergency.

Pay Off (and Stay Out of) Debt

One of the most important ways to keep your finances on track is to stay out of debt.  You don’t want to be paying back money that you owe, not to mention wasting money on interest, that you could use to get ahead.  If you are not free of debt yet, putting together a payment plan would be a first step to rid the balance.  Once paid off, you can cut up the card if you need extra willpower, but keep the account open, as closing the account could lower your credit score, removing that available credit from your total.

Although Far Away, Really Focus on Retirement

Whether you are out of college, or a decade away from retirement, getting older and not having to work is always a dream, but in order to make it a reality, you need to have funds available to live off.  We cannot be sure that social security income will be there when we need it, not that you could live off that anyways, but anything that you can contribute to a 401(k) or IRA account, earlier the better, so that it will have time to grow over time, giving you the balance you need to live life to its fullest in your golden years.

Keep Track of Spending

One area that most of us could use some improvement on, myself included, would not only be to keep track of spending and knowing your balance at all times, but actually reducing spending altogether and minimizing unnecessary spending.  Whether it is excessively going out to eat, spending too much at the bar, or just carelessly spending money on shopping, unnecessary spending can come in all forms.  Just to give yourself an idea of how much you are spending, take a look at last month’s bank or credit card statement and go line by line and see what could have been avoided.

Use Cash Instead of Credit

If you are having trouble setting yourself a spending budget, one good way, although credit cards can be great for the rewards, if you are using it too much, you can put the plastic away and just use cash.  At least this way, whatever spending limit you impose on yourself, one you have spent the cash, you are done until next paycheck.  It might be a good way to appreciate the value of the dollar a little more now that we typically deal with only plastic and you lose the feel of a transaction where you see the money leaving your hand and going into the register.

Not a Solo Act

You shouldn’t have to manage the finances alone.  If you are single, you can confide in a friend, family member, or tax professional that you trust, so you can bounce ideas off someone other than yourself.  If you have a significant other, since the finances involve both of you, then you should make sure that each know how much money is coming in and going out, not to mention knowing what is saved and what still needs to be saved for the future, so you can work together to reach that goal.

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