Managing money and saving for a nice cushion during retirement can seem like a challenge to those who live paycheck to paycheck.
If it’s your own personal goal to financially free yourself in the immediate future and stay out of debt once and for all, you can be on the way to financial freedom. As long as you have a positive mindset from the beginning and you stay the course make baby steps to be financially free.
Here are some tips and resources to consider when planning to be financially healthy.
1. Set goals
The first thing you should do is set a concrete goal and stick to it. These goals can help guide you, even in the toughest financial situations.
When you are coming up with these, think of it as a kind of mission — they should be important and personal in order for them to be effective. If you’re focused on a specific goal, for instance, saving up for an emergency fund, keep this at the forefront of your goals.
Write it down and post it some place where you will see it on a regular basis, so you can remind yourself of your goals.
2. Track spending
We’ve all heard of the term “penny pincher.”
If you actually keep track of every cent that comes in and out of your pocket, you can become conscious of how this money comes and goes in your life as opposed to how you think it comes and goes. You can track your spending the old fashion way by using a cash notebook or with online tools.
3. Get rid of the plastic
If your credit card use is out of control or beyond what you can afford to pay right now, consider putting them aside for a while until you can pay the balance down.
Use cash or your debit card until you can get everything in order.
4. Save fast
As you’re working diligently to pay off your debt, try to save up to $1,000. This can be used as a starter emergency fund.
Set aside this money and put it in a money market account or savings account to deter you from dipping into it. This will also deter you from using your credit card to pay off necessary bills.
5. Pay your debts
Take the time to make a list of all your outstanding debts.
This can include car loans, student loans, credit cards and any other bills that aren’t related to your home mortgage. Arrange them in order from smallest to largest.
Designate a certain amount each month to pay towards the debts except the one with the lowest balance. The debt with the lowest balance you can pay as much as you can on it. Continue down the list until all debts are paid off.
6. Increase your retirement
Set a goal to increase your retirement income up to 15%.
Start with your 401(k) or Roth IRA if applicable or traditional IRA. Your savings will increase and you will receive many tax incentives that will set you up for a stress free financial future.
7. Educate yourself
Personal finance doesn’t have to be an obstacle. Visit your local library and borrow money books and personal self-development books such as, “How to Get Out of Debt and Live Prosperously,” “The Magic of Thinking Big,” or “The Random Walk Guide to Investing.”
Kaia is a freelance writer for MyBankTracker who specializes in real estate, saving and banking.