How were your finances last year? If you answered something like “They’re about as okay as that time I blacked out in the middle of my final college exams”, then I have just the thing for you.
You might have heard some of these “how to save” tips a million times before. Others might be new to you, though. At any rate, there’s a good reason why personal finance experts repeat them again and again, and why I chose to include them here. Let’s dig in, shall we?
Eliminate Your Credit Card Debt ASAP
You know that seemingly insignificant thing called “interest” on your credit card? Well, it becomes a lot more significant later on – especially if you have a habit of missing due dates. Next thing you know, your credit card statement will make you go: “Wait a minute, did my dues just double?!”
That’s why it’s important to pay your credit cards on time, every time. If that’s not possible for any reason, try to pay off as much as you can, to keep your interest due from getting out of hand.
Sign Up for a Rewards Credit Card
Then again, you might be the rare type of credit card holder who always pays debts in full, and on time. In that case: Congratulations! You’re probably eligible for a rewards credit card, which allows you to enjoy a number of perks like cash backs and gift cards.
Ask your credit card company for more details on this. Alternatively, you can check out various sites to check out reviews of popular credit cards to see which one suit’s your lifestyle choices the best.
Keep Tabs on Your Cash Flow
You know how much goes into your bank account. But do you know how much goes out? Starting today, keep receipts on your expenses, and manually record them using a spreadsheet program like MS Excel. You can also save yourself the hassle, and download these apps to track income and expenses instead.
Maximize Workplace Retirement Programs
Does your company offer a traditional and/or Roth 401(k)? If yes, take advantage of them. Not only will these fill up your retirement account until you make a withdrawal, but they’ll also legally reduce your taxable income. Keep in mind that there are limits to how much you can contribute at any one time, however, so don’t forget to consult with your employer on the details.
Have an IRA, Too
Whether you already have a 401(k) or not, it helps to have an individual retirement account (IRA). Here, you can save and put your money into stocks, certificates of deposit and other investments unavailable to 401(k) holders. Find a bank, brokerage or credit union near you, and inquire about any IRAs they offer.
Use Your Employer’s FSA
Aside from 401(k)s, your employer might offer a flexible spending account (FSA) too. This usually covers transportation, medical and other regular expenses you incur at work. Since FSAs are taken out of pretax dollars, they’re a splendid way to minimize your taxable income.
Look for Low-Cost, High-Quality Insurance Policies
At the very least, you should have these five most important insurance policies: long-term disability insurance, life insurance, health insurance, homeowners insurance and car insurance. These will cushion you from any major shocks, in case you suddenly have to shell out a huge amount of cash in the future. To find the best insurance policy for you, check out these tips from NDTV.com.
Set Up an Account for Your Nest Egg
Open up an online savings account where you can keep and grow your excess funds. Try to find those that have high yields and are FDIC-insured, such as the ones listed here.
Also, set up your paycheck such that it’ll automatically be funneled into your savings account. This way, you’ll enjoy the convenience of a “set it and forget it” approach to saving.
Open a Free Checking Account, Too
Sometimes, issuing a check is the most practical way to pay for something. If you’re going to open a checking account, be sure that it’s free and not interest-bearing. Otherwise, hundreds of dollars will be drained out of your funds, from right under your nose!
Don’t Forget Your Emergency Fund
Yes, it’s a hassle to maintain multiple bank accounts. But you know what they say: Never keep all your eggs in one basket. Keep your emergency funds separate from both your nest egg and paycheck accounts, to avoid accidentally spending the money you’ve been saving up for the rainy days.
Be Accountable to a Partner
Let’s face it: It’s hard to successfully manage money on your own. Talk to a close relative, friend or S.O. about your finances, and work out a system to hold you accountable for everything that goes in and out of your bank account. If you’re not sure whether these people will be of much help, you can always pay for the services of a professional financial planner instead.
Don’t Neglect Your Greatest Asset
As corny as it sounds, you are your greatest asset. There’s no point to having all that money, if you can’t use some of it to indulge in experiences that’ll help you grow as a person. Whenever you have cash to spare, treat yourself to a vacation in a foreign country, a cup of premium coffee, or that book you’ve always wanted to read. It’s never too early to enjoy life, after all.
Make 2015 the year where you take your finances by the horns, and pull it to an above-the-red level. Evaluate where you are now, follow the most applicable tips above, and turn your financial situation around.