Get Your Finances Organized with These 4 Tips
Older people have more to consider, particularly as relates to finances. Retirement is much closer, you have college fees, insurance, pensions, and other normal-life expenses to think about. It's no wonder that studies show that most generally have saved just 12 percent of what they need post-retirement by retirement age.
For many people, this doesn't represent apathy to their future needs; rather, present expenses including the weight of various debts leave nothing to save by the end. Additionally, various financial guides and plans do not offer realistic plans for the average household – most are either too stringent or intended for higher-income earners.
This article discusses five tips that anyone, yes, anyone, can follow to improve their financial standing in just a few short months.
1. Reduce Your Recurrent Spending
Find places where you can shave off much-needed dollars. Begin with your fixed/recurrent expenses – reducing these means you make savings every month instead of just one-off.
Energy bills are a huge money-guzzler. Start by making small changes to reduce your energy consumption, and then talk to your provider to see if they can offer a fixed-rate tariff.
If you have an empty nest, think about shutting down parts of the house or moving to a smaller house. Otherwise, ensure the house is properly weather-proofed so that you're not bleeding energy through the cracks.
Shop for cheaper car insurance or ask your current provider for discounts, especially if you have a clean driving record. Do this every year.
Reduce your phone bill by using the internet for long-distance communication, and then get a cheaper plan. You may get better rates by using a single ISP for cable and internet.
2. Reduce Credit Usage
Credit cards are convenient, especially when you're broke. However, they can create a debt trap you may not kick well after you've retired. Reduce your reliance on credit sources by only using debit cards or cash.
Increase your financial discipline by only buying what you can truly afford (i.e. what you have money for now). Additionally, paying off your current debt gets easier if you're not accumulating new debt. Save your credit card balance for real emergencies.
3. Track your budget
You'll be shocked at how much you lose through the cracks if you don't have a written budget. Seeing how much you spend on eating out or entertainment, for instance, can sober you up real fast. There are free apps and tools you can use to track your expenses and shed light on things that should be reined in.
4. Use Your Raise Well
When you get a raise at work or open up a new income (like a tax refund or dividend), find out how the new money can help secure your future. Instead of going on vacation, pay off a little more on your mortgage or credit card debt. If not, increase your installments into your savings or investment plan.
It doesn't hurt to spoil yourself and family with new income from time to time, but make this the exception rather than a rule. Also, if you haven't had a raise in a while, discuss with your manager whether you're due for one. The worst thing they can do is say no, and that leaves you exactly where you are.
Once you have the basics down, sit with a financial planner or advisor and find out the best ways to make your money go further or earn more for your future. Managing your debts wisely is also important, and you can contact us if you need help.