It is never too late to get your personal finance under control and prepare for the future. Many of us think we have all the time in the world to think about the future, and pretty soon you are old enough where you realize that you should have cared more and you should more to show. With a few adjustments, you can be on track in no time.
More Money Coming in Than Going Out
It may seem like common sense, but if you are spending more money than is coming in each month, it will only lead to mountains of debt, giving away money on interest, possibly setting up future years of trouble. Keep a good count of all monthly bills and spending throughout the month so you can begin to analyze and make any necessary cuts and adjustments as needed.
Keep Accounts to a Minimum
If you are having trouble staying organized than the best advice might be to keep things as simple as possible and having limited accounts. By keeping a checking and savings account, and one credit card opened, it can ensure that the needed funds are available and payments are not missed. If you are able to handle multiple credit cards in the future it will actually help your score to have more open at a zero balance.
Build an Emergency Fund
Now that you have your financial situation on record, it is now time to save money. It takes time to build up accounts, so a good way to start would be to create an emergency fund, which a rule of thumb is to have enough money saved to have three to six months’ worth of expense on hand, in case of unexpected charges or job loss.
Get Rid of Debt
While you are starting to save money, your priority should also be to get rid of debt, as paying interest is just giving away money. There are a couple different ways to attack: getting rid of the highest interest accounts first will save you the most money in the long run, but paying off the smallest accounts first could give a sense of accomplishment seeing them down to zero.
Create a Budget
Now that you have starting to pay off debt and are saving a little money it is time to maximize every dollar and eliminate unnecessary spending. Review bank and credit card statements, going down every line and circling in one color which is a necessary expense, and another color for spending. See which could have been avoided, and which you should avoid going forward.
Save, Save, Save!
As you are hopefully gaining a few extra dollars in your account at the end of the month by reducing unnecessary spending, the goal should be to save for your future. Retirement accounts should now be the focus, and check with your company about matching contributions, as that is free money that you could be missing out on. Saving money is the most difficult part, but once you see the accounts growing, you will want to continue.