There are so many factors when it comes to having a “perfect life”, and I use the term loosely as it is probably near impossible for everything to be perfect, but when it comes to personal finance, that can be a major factor in determining quality of life, as money can be a stress factor that can even make or break a marriage. The earlier you can get on top of your finances, the better, as you can begin to prepare for your future without scrambling later in life.
Be the Minority that Can Handle a Budget
Studies have shown that two-thirds of the American popular do not follow a budget, so it is scary to think that every month that goes by is a free-for-all, and if you come out ahead, great, if not, you can slip into debt. If you can be the minority who can actually keep an account of every dollar going in, going out, and successfully allotting funds for spending, you can be ahead of the game, with the goal of freeing up additional funds each month that can be used to pay off debt and save for retirement.
An Emergency Fund is Important, but Don’t Keep Too Much in There
Think about in your current financial situation, if you had a needed auto repair for $1,500, how would you pay for that? Do you have the funds available in an account that you can pull from to pay, or would you have to put on a credit card? Experts say that you should keep between three and six months’ worth of expenses for times like this, so your budget will not set you back having to pay off, although it can be debated that if you keep too much in there it could be best used growing in another account.
Reducing Spending is Tough but Necessary
It will be cut off all of the spending you enjoy currently overnight, but if you can reduce unnecessary spending on impulse purchases, going out to eat a few times a week, or hitting the bars, just think about how much extra you will have each month. Try just going out to eat once a week and see how you do.
Don’t Forget About Your Future
As you continue to get spending under control and are opening up extra money each month, paying off debt is a priority, but you will also need to start saving for the future with contributing to a company 401(k) or IRA account, gradually increasing contributions each year. If you increase a little at a time you will hopefully not notice the missing money as much and will hopefully be less likely to spend it elsewhere.
Stay on Track
Those who are successful at their own personal finance will be the first to say it is not easy, but with patience and discipline it can work for you as well. Try rewarding yourself if you have a successful month, as life experiences are still a necessary balance to saving money.