Reach for Financial Success
It is always a good time to think about finances, and create a budget for this year that will bring you the financial success that we all desire. We often make a commitment to improve our personal situation, but procrastinate.
There is no time like the present to make a home budget if you don't have one, so you will know exactly where your money is being spent. It will also show you places where you may be able to cut back, and put more money into savings. Below are twelve steps that will bring help you reach your goals.
Credit Reporting Agencies
First review you credit report from all three credit reporting agencies. There is no cost for the credit report and the reason you want all three is these companies are for profit and in competition with each other, so the information may be different on each report. You can get one for free annually from:
- Equifax P. O. Box 740241, Atlanta, GA 30374, 1-800-685-1111,
- Experian P. O. Box 2002, Allen, TX 75013, 1-888-397-3742
- Transunion P. O. Box 1000, Chester, PA 19022, 1-800-888-4213
I included the addresses in case you have something on the report that is incorrect, so you may need to write to the company with your a copy of your proof.
It is also wise to obtain your credit score, which may cost you a small fee, however, your credit score is a major dictator of whether or not a lender will extend credit, and at what interest rate. If your score is low, take the necessary steps to try to increase the score by bringing down your debt. You may have too many credit cards.
Money
First 6 Steps of Success
Secondly, reducing your debt is an important consideration in many cases. If you are piling new debt upon old debt that is a red flag to lenders that you are living above your means. You must stop all impulse buying. If you need help reach out to a financial coach such as the National Foundation of Credit Counseling or Family Foundations.
Number three is save 10% of your net income in a savings account each pay day. Find extra money to put in savings with bonuses, raises, money from a garage sale, and any other money that is not part of your normal income.
The fourth important thing is to get financially organized. It is important to have a place to keep you family’s financial records where you can find all your documents. It can be a file drawer with a couple of files, an accordion folder or even a couple of large envelopes. Put your mortgage, wills and original documents in a safety deposit box.
Number five is to absolutely avoid late fees or overdraft fees. Pay your bills promptly. It is very helpful to keep your finances in a computer program such a Quicken or Money. There area also free programs online and you can use Excel. Be sure you write down all ATM cash withdrawals or debit purchases. Online banking for paying bills can also be helpful for those who are comfortable using the computer. Plus, you can check your bank account online periodically to make sure there isn’t anything you have accounted for all your expenditures.
The sixth thing that is helpful is to track your spending for 30 days. This works just as well as writing everything you eat for several days when you are going on a diet. Write down every penny that is spent. Quite often it is the small items that cause our problems and we don’t realize how they add up. At the end of the month sit down with your partner to review the spending as this is the best way to truly know where your money is being spent.
Steps 7 through 11
Number seven, create a practical spending plan. Make conscious decisions on just how you want to spend your money. It has to be a plan that will work for you and your family. It can’t be too strict or no one will stay on it, and if it is too lenient you might not meet your financial goals.
The eighth step you should take is to take advantage of free money. Contribute the maximum amount to your retirement plan at work, or at the least match the employer’s contribution. Flexible spending accounts or Health Savings Accounts can help lower your taxable income.
Another way you might save money is to have an “insurance check-up” annually. This means you meet with the insurance provider and confirm your coverage, plus you may inquire about ways you can save money. Maybe your auto insurance can be lower if you have a good driving record, or you might want to bundle all your policies with one provider to get a multiple policy discount. You can also save money by increasing your deductible.
The tenth thing to do is plan to buy a house if you don’t own one. A home of your own will stabilize your payments, hopefully build equity and you have the tax write offs for interest and property taxes.
Next, if you have children, save for college. Too many students graduate from college with student loans that can take many years to repay. There available college savings plans such as 529 plans or prepaid tuition plans, which may be perfect for your needs
Number twelve is remembering to budget for fun. It is important to have some fun along the way even while working hard toward reaching financial success. Put a line item in your budget for fun.
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