As the year comes to an end you have reviewed how you’ve been managing your money and want to do better in the coming 12 months. First of all, congratulations for taking a stab at financial management – it is an important step to becoming financially liberated. Even the richest people will tell you that there are certain things they can do to become better financial managers. For the coming year consider doing the following:
- Look at all the unnecessary spending that you have done this year and eliminate it in the coming year. Did you buy clothes that you did not need? Did you go on holidays that you could have done without? Did you buy a second car when you could have done just as well with one? Did you eat out too often? Alone, none of these things may seem significant, but when you add them up you will find that they consumed a large chunk of the money that you made in the last year. For the coming year come up with a plan and stick to it.
- Pay yourself first. One of the biggest problems in America today is an ageing population that has little in the way of savings. You must always think of the years ahead. What will happen once you are retired and no longer have a paycheck? Will you be able to maintain your current lifestyle? The only way to do that is to save towards your retirement every month.
- Have an emergency fund. You may have a few hundred dollars stashed away in a coffee can at the back of the cabinet but what would happen in the coming year if you were faced with a real emergency such as loss of a job? If you don’t already have an emergency fund you should set one up.
- Lower your debt levels as much as you can in the coming year. Most Americans live in debt – in fact, they assume that it is the normal state of things. Debt is not normal at all and should be avoided whenever possible. One of the most important financial lessons that people have learned in the last decade is that debt will only make things worse, not better. You can avoid debt if you live within your means – don’t spend more than you earn. Pay off your credit cards every month before they begin to accrue interest and never have more than one or two cards at a time.
- Take care of what you already own. Taking care of assets that are already yours will lower your expenditure. If you ensure your car is regularly maintained, for instance, you will not have to pay for expensive repairs sometime in the future. The same goes for your home and all other assets.
Lastly, have proper insurance in place – you may be able to pay all your bills every month but if you don’t have insurance and something happens to you your family will have nothing to fall back on.