The Kind Tips – Tips for Life, Study, Work and Entertainment – Top 4 Personal Money Management Tips

Top 4 Personal Money Management Tips

Top4 Personal Money Management Tips

Proper management of your personal finances is the first and most important step to a secured financial future. To help you better manage money, a financial plan should be well developed. The financial plan should include your financial goals, the time you want to accomplish the goals, as well as how much money can be contributed to achieve the goals. Please determine your personal financial situation and then decide which tip to implement.

1. Create a budget.

Creating a budget is very important in managing personal finances, because a budget tracks all you money coming and going, and also allows you to look at places where expenses can be cut or saved for major purchases and your retirement plan. Before you set a budget, you should have all the receipts and documents related with your expenses in hand. Subtract the household expenses from your monthly income and decide how much to contribute to your saving account. It is an easier way to save more money if you don’t see it, hence you can consider making automatic contribution to your saving account monthly. Give your discretionary spending with priorities and try to eliminate unnecessary purchases so that everything will fit in your budget.

2. Save and invest.

Saving and investing help you take control over your personal finances. Some financial professionals suggest to save at least six months’ living expenses. Choose a bank that offers competitive interest rate and FDIC-insured. Generally, money market accounts have higher interest compared with regular saving account. If you wish to have even higher interest rates, a Certificate of Deposit might be one of your options. But please keep in mind that when you choose investment, determine your financial goals and risk tolerance first. If you are a conservative investor, try some safe ways such as mutual funds and bonds, while if you are aggressive, you can opt for stocks that have higher returns.

3. Plan for your future.

Depending on your employment status and your financial goals, you may have different choices about retirement plans. 401k is probably the most popular retirement account, which is employer-sponsored. Many companies can give a match on employee contributions. While, if your employer doesn’t offer your retirement benefits, you can think about to invest in a ROTH IRA or a traditional IRA. For self-employed business owners and workers, retirement options are available in between Simplified Employee Pension (SEP) IRA or Savings Incentive Match Plan for Employees (SIMPLE) IRA. The SIMPLE IRA is eligible for you if you have less than 100 employees. You can also choose to match your employees’ contributions. SEP IRA is a simpler plan that offers low cost on maintenance.

4. Pay off high-interest debts.

If you want to enjoy financial freedom, paying off the high-interest debts should be marked with top priority. If you continually pay those high-interest debt monthly, you may have no chance to save money, invest or prepare for retirement. Hence, if you have several credit cards with various interest rates, start with the highest one. If you have your credit cards come with different interest rates, you might want to consider debt consolidation, which can possibly get you with a lower interest rate with lower monthly payment.

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