Top 10 Financial Tips
1. Get Paid What You're Worth and Spend Less Than You
No matter how much or how little you're paid, you'll never get
ahead if you spend more than you earn. Often it's easier to
spend less than it is to earn more, and a little cost-cutting
effort in a number of areas can result in big savings. It doesn't
always have to involve making big sacrifices.
2. Stick to a Budget
One of my favorite subjects: budgeting. It's not a four-letter
word. How can you know where your money is going if you don't
budget? How can you set spending and saving goals if you don't
know where your money is going? You need a budget whether you
make thousands or hundreds of thousands of dollars a year.
3. Pay Off Credit Card Debt
Credit card debt is the number one obstacle to getting ahead
financially. Those little pieces of plastic are so easy to use,
and it's so easy to forget that it's real money we're dealing
with when we whip them out to pay for a purchase, large or small.
Despite our good resolves to pay the balance off quickly, the
reality is that we often don't, and end up paying far more for
things than we would have paid if we had used cash.
4. Contribute to a Retirement Plan
If your employer has a 401(k) plan and you don't contribute
to it, you're walking away from one of the best deals out there.
Ask your employer if they have a 401(k) plan (or similar plan),
and sign up today. If you're already contributing, try to increase
your contribution. If your employer doesn't offer a retirement
plan, consider an IRA.
5. Have a Savings Plan
You've heard it before: Pay yourself first! If you wait until
you've met all your other financial obligations before seeing
what's left over for saving, chances are you'll never have a
healthy savings account or investments. Resolve to set aside
a minimum of 5% to 10% of your salary for savings BEFORE you
start paying your bills. Better yet, have money automatically
deducted from your paycheck and deposited into a separate account.
If you're contributing to a retirement plan and a savings account
and you can still manage to put some money into other investments,
all the better.
7. Maximize Your Employment Benefits
Employment benefits like a 401(k) plan, flexible spending accounts,
medical and dental insurance, etc., are worth big bucks. Make
sure you're maximizing yours and taking advantage of the ones
that can save you money by reducing taxes or out-of-pocket expenses.
8. Review Your Insurance Coverages
Too many people are talked into paying too much for life and
disability insurance, whether it's by adding these coverages
to car loans, buying whole-life insurance policies when term-life
makes more sense, or buying life insurance when you have no
dependents. On the other hand, it's important that you have
enough insurance to protect your dependents and your income
in the case of death or disability.
9. Update Your Will
70% of Americans don't have a will. If you have dependents,
no matter how little or how much you own, you need a will. If
your situation isn't too complicated you can even do your own
with software like WillMaker from Nolo Press. Protect your loved
ones. Write a will.
10. Keep Good Records
If you don't keep good records, you're probably not claiming
all your allowable income tax deductions and credits. Set up
a system now and use it all year. It's much easier than scrambling
to find everything at tax time, only to miss items that might
have saved you money.