Everyone knows the importance of learning more about personal finance, but how many actually take steps to organize their financial situation — automate bills, create a budget, or make smart investments and diligently save for retirement? Unfortunately, because many are stuck living paycheck to paycheck, it may be an intimidating or overwhelming task to figure out where to begin.
If you fall into this category, just remember, it’s never too late to start learning. Take a look at MyBankTracker’s top three personal finance tips, and start building a better financial life for you and your loved ones.
1. Build wealth
Building wealth is all about bringing in more than you spend — there’s no way around that. Focus on boosting income and cutting expenses. The key is identifying where you can bring in more money and where you can easily cut costs.
2. Review your financial lifestyle and spending habits
Once you have examined your spending habits, select financial accounts to complement them. For example, identify a checking account that makes it easy for you to avoid or minimize fees, or if you constantly pull out cash, find a bank that offers ATM reimbursement (i.e. Ally Bank).
Pick a credit card that allows you to earn the most rewards based on your spending tendencies. Also, use a personal finance management tool that allows you to see your financial accounts in once place, like Mint.
3. Find simple ways to save and invest
Make it a goal to grow your savings before putting it to better use in other deposit or investment accounts. Once you feel comfortable putting a certain amount away (some experts advise saving 10-20 percent of your paycheck), automate the savings process, so you don’t have to think about it.
When you are ready to start investing, opt for a diversified index fund to create a balanced asset allocation that matches your risk tolerance.
Also, if your company offers it, participate in a 401(k) program, as contributions are automatically pulled from your paycheck.