Whether you’ve recently started to evaluate your financial situation or you’ve tried to do so many times before, you might feel as though you’re considering a massive bundle of information. When it comes to finances, your thought processes can move in so many directions that the entire situation can come across as overwhelming. Instead of trying to figure everything out at once, take into account some general financial information that everyone should know.
1. Choose a savings account that pays you interest.
You might think that keeping all of your money hidden under a pillow at home is the best idea. However, this method does not provide you with the opportunity to see your money grow and might render you an easy target for criminals. Opt for a savings account that pays you interest. For example, some accounts will pay interest on a monthly or yearly basis. Shop around so that you can get an account that pays you the most interest possible. Do remember that you may have to pay tax on the accrued interest, depending upon how much it is.
2. Set up automatic transfers.
Once you have the savings account, you want to make sure that money is actually going into it. One of the smartest ways to accomplish this goal is to set up automatic transfers. In other words, envision that your paychecks are directly deposited into your checking account. On the day that these checks come in, have a portion of them directly sent into your savings account. If you don’t really ever see the money, you are probably less likely to spend it. Also, work to select a savings account that allows for a maximum amount of withdrawals and outbound transfers each month. If you are constantly taking money out of your savings account, you aren’t really saving.
3. Set up automatic payments.
With your bank accounts in order, you should set up as many automatic payments as you can for your bills. When the money is lingering around in your account for an extra day or two, you might feel tempted to spend it instead of putting it toward your bill. Also, having automatic payments for your bills means that you aren’t going to pay late. Late payments can mean that your credit score takes a hit or even that your wages are garnished.
4. Pay bills on time.
Once you get into a mode of paying bills late, getting out of that bad habit is difficult. In other words, you can end up creating a vicious cycle for yourself. For example, if you pay your cell phone bill two weeks late one month because of financial problems, you may not have the money to pay when the next month’s bill comes around. You may find yourself in a situation where you do not have the necessary funds to pay a bill. If this situation occurs, call the company to find out if flexibility is available. You may find that the answer is positive, especially if you have always paid your bills on time in the past.
You may have budgeted just enough to pay all of your bills for the month, but then are hit with an unexpected emergency bill you have to pay off. If you don’t have the savings to cover it and don’t want to divert money designated for your bill payments, you may want to consider short term payday loans.
5. Build credit.
Some people might tell you that the trouble starts as soon as you take out your first credit card. However, if you never own a credit card, you might seriously find that you have trouble building credit. Without credit, you may discover that it is difficult to take out a loan for a car, for a home or to return to school to pursue another career path. As long as you are smart with your credit cards and pay off the balances in full every month, these pieces of plastic can work to your advantage.
6. Know and monitor your credit score.
Your credit score is also of extreme importance when it comes to pursuing future financial opportunities. Therefore, you want to make sure that you know your credit score and that you work to build it up higher. Use a reputable source to monitor your credit score. For example, your bank might offer a free tool to keep an eye on your score when you log into your banking account. Some of these tools will also allow you to simulate what your score could be if you were to pay off a certain amount of debt or extend the life of your credit card. Such projections can help you to set smart goals for the future.
7. Learn to negotiate.
Sometimes, you may feel as though everyone around you is paying a lower price for services or products than you are. Learning how to negotiate is a valuable tool that can keep more money in your bank. Talk to your relatives and friends about techniques that they have used to lower specific bills in your area. Then, integrate these techniques into your own plans.
8. Create a budget.
Unless you have an unlimited amount of money to spend, you really need to create a budget for yourself. The budget first needs to account for the bills and expenses that you absolutely must pay and cannot change. Then, you can determine how much money can be transferred into your savings account with each paycheck and how much you have leftover for entertainment spending each month.
Starting with a general picture when it comes to financial information is a way to feel less overwhelmed. As you begin to navigate these different areas, you can meet with an accountant or financial advisor for direction and guidance that are more specific to your personal circumstances.
