Money management is essential if you want to grow your savings. In today’s increasingly complex economic world, it is not enough to simply bring home a regular paycheck. Managing your finances takes careful planning and a working knowledge of things like investments, taxes, and credit. While the services of an astute financial planner can definitely be helpful, educating yourself about your financial options is equally vital to achieving long-term fiscal health.
PRACTICE SOND MONEY MANAGEMENT WITH THESE 5 PRINCIPLES
Understanding Your Paycheck
Your employer regularly deducts certain items—such as Social Security and relevant taxes—from your gross salary each pay period, but there might be additional credits and deductions that can help lower your tax bracket. Ask your accountant or tax attorney about any other options you might have, and also keep him or her apprised of any significant changes that have taken place in your life. You may be eligible for additional exemptions (e.g., for a child with special needs or certain medical conditions). If your company offers a retirement savings program, taking advantage of it will both lower your income bracket and also help you put money toward retirement.
Be a Shrewd Saver and Investor
The old adage “pay yourself first” still holds true. Open a savings account and arrange for your financial institution to transfer a fixed amount from your paycheck every month. Build an emergency fund that will be adequate to cover your needs should an unforeseen emergency strike.
Protect Your Money
Keep your financial records current and in good order. Purchase adequate insurance on your home, car, life, etc. and review your policies annually as your needs change. Stay vigilant about the risk of identity theft and review all your financial statements as soon as they arrive. Be sure to report any discrepancy or suspicious transactions immediately.
The first step is to create a realistic budget and then stick to it. Being a wise spender does not mean depriving yourself of life’s pleasures. By simply practicing behaviors such as comparing prices, taking advantage of sales, carpooling, or taking public transportation, you can enjoy the good life without having to pay full price. And you’ll be a smarter consumer as a result.
Be a Responsible Borrower
When you need to borrow funds to make a major purchase or to build your credit, shop around for the lowest annual percentage rate (APR) on a credit card. Several websites offer rates for comparison, so finding the information you need is relatively easy. Always pay your bills on time, and make it a habit to pay more than the minimum due so you’ll save on finance charges. You can request a free copy of your credit report every twelve months from the three major credit bureaus: Experian, TransUnion, and Equifax. Review these documents carefully and report any suspicious or unauthorized activity.