Wednesday, December 29, 2010
About this time every year, millions of Americans start to think
about possible New Year's Resolutions. While some people resolve to
quit smoking or lose weight, others may choose to improve their
finances. Instead of creating a vague, unrealistic goal try
creating a simple plan of attack that can easily be achieved.
The Top 10 Ways to Improve your Finances are:
1. Make a Budget - Create a budget and stick to it. This will
help you break the cycle of living paycheck to paycheck. The best
way to do this is to look at how much money comes in and goes out
for a 30 day period. Use a budget calculator to help get
2. Reduce Expenses - Can't pay your phone bill but you spend
$15-$20 a day between coffee and snacks. Look for ways of reducing
expenses such as brewing your coffee at home, packing a lunch,
switching phone carriers and clipping coupons.
3. Pay off Debt - Do you know how much money you are paying in
interest to your credit card company? By reducing and/or
eliminating your debt you will not only save money paid in interest
you will have the money to save for your future. If you have a
structured settlement, annuity, pending lawsuit or other illiquid
asset it may be beneficial to sell some of the future payments in
order to pay off your debt.
4. Create an Emergency Fund - Do you have 6 months worth of
monthly expenses saved just in case you fall on hard times? If not,
you need to create a fund in order to protect yourself from falling
behind on your obligations if you lose your income. Some people
have created their emergency fund by putting a portion of their
cash lump sum into an interest bearing account.
5. Save Money - Are you going to need a new car soon? Perhaps
you want to take a vacation next year. Maybe you need to make home
repairs. Rather than acquiring more debt, save for your purchases
and pay in cash.
6. Save for Retirement - The earlier you save for retirement,
the better off you will be. If your employer offers 401(k)
matching, be sure to take advantage of this opportunity for free
7. Protect your Assets - Make sure to maintain your home to help
it retain its value. Don't forget to have a will to ensure that you
decide how your assets such as your home, annuity or other assets
are divided not the government.
8. Get Insurance - Your apartment, home, car and other valuables
need to be protected in case of theft, damage or loss. If you are
not properly insured you may not receive enough money to repair or
replace them. If you have children that need to be supported after
you are gone, make sure you have life insurance.
9. Protect your Identity - Identity theft can be costly not to
mention damaging to your credit score. Monitor your credit report.
Check your accounts for unauthorized transactions. Shred documents
instead of throwing them in the trash. Shop online at credible
merchants and use Pay Pal.
10. Manage Credit/Credit Score - Check your credit report every
six months. Make sure you pay your bills on time and avoid using
credit cards whenever possible. Some experts say to freeze your
credit card to avoid making impulse purchases.