Many people struggle financially. Every day they fight with it. Some people don’t focus on their finances all that much. They believe that things will automatically improve. I hate to be the bearer of bad news, but it doesn’t. You have to work at it. Today, I will discuss ten smart money moves you should make to help you get your finances in order.
Ten Smart Money Moves
1. Know Your Balances
To make any changes to your finances, you must know your balances. You should know how much money you have in your checking account. In the past, I’ve sometimes made the mistake of just swiping my card without knowing what my balance was. I ended up getting more than a few overdraft fees. Getting charged those fees wasn’t fun. I eventually got my act together and paid attention to my balance. Besides your checking and savings account, you should also track your credit cards and loans (student, mortgage, etc.)
One tool that I use to help me keep track of everything is Mint. With Mint, you can see the balances of my checking, savings, credit card, and loan accounts in one central location. You can also view the different transactions that you have as well. Mint also allows you to see your portfolio information and more.
Learn more about Mint here.
If you don’t want to go online, you can do it old school and get a check register. Believe it or not, many people still use them.
2. Create a Budget
Understanding the importance of allocating funds through budgeting is vital to achieving a financially stable life. It’s like a roadmap guiding the journey to financial success. Start by identifying income sources and listing all expenses, from the most significant to the smallest. It’s essential to be honest and thorough in this process.
Once everything is on paper, it becomes easier to see where money is going and where adjustments can be made. Budgeting tools or apps can simplify this process, providing a clear picture of financial health. With a well-planned budget, it’s possible to take control of finances, avoid unnecessary expenses, and start saving for the future.
3. Pay Off Debt
The next thing that you want to do is pay off your debt. Debt is one thing that holds many people back. As of this writing, the United States is nearly $32 trillion in debt. That’s just ridiculous.
To achieve financial security and freedom, debt repayment is essential:
- It lessens the stress and financial load of debt, allowing you to concentrate on more significant life goals.
- Paying off debt releases money for savings or investments by reducing interest payments.
- Paying off debt raises your credit score, making getting future loans or low-interest rates simpler.
4. Side Hustle
Finding a side hustle will help you pay off your debt quickly. There are hundreds of things that you can do to make extra money. If you need help, check out this list of 70+ side hustles. You will be able to find something that you can do. When you start making money from your side hustle, make sure that you use the money specifically to pay down your debt. If you do that, you will be out of debt sooner than later.
Some of my favorite side hustles have been selling things on eBay and selling t-shirts. Find out what side hustle you can do well and get to work.
5. Balance Transfer Card
Getting a balance transfer card will help you pay your credit card debt quicker. A balance transfer card is crucial for several factors. The first benefit is combining your high-interest credit card debt into one account with a lower interest rate, potentially saving you money on interest payments.
By merging several credit card payments into one, streamlines your finances and makes it simpler to manage your debt. Third, a balance transfer credit card frequently offers a low or 0% rate introductory term, allowing you crucial time to pay off your debt without accruing additional interest. Last, utilizing a balance transfer card can raise your credit score over time because it shows that you manage your debt responsibly and lowers your credit utilization rate.
6. Refinance Loans
Many student loans have high-interest rates. It could be variable, making your payment fluctuate every year. If that’s the case, consider looking at a company allowing you to refinance the loans. There are a lot of banks and financial companies out there that provide this service. Companies like Earnest and Sofi are two lenders that I would look at if you are considering refinancing. These lenders typically have reasonable rates that will save you money.
They also have a lot of great resources on their sites, such as payoff calculators and different money guides.
7. Retirement Savings
Acknowledging the necessity of retirement savings is integral to ensuring our financial peace of mind. It’s not just about stashing away money aimlessly but about strategic planning and consistent efforts. One of the most effective strategies is to start saving early, allowing the power of compound interest to work its magic. It’s like a snowball rolling down a hill – the earlier it starts, the bigger it gets.
Something else to consider is, diversifying the retirement portfolio across different assets can help mitigate risks and potentially yield better returns. Remember, retirement savings isn’t a sprint; it’s a marathon that requires patience, discipline, and a clear vision of the future.
8. Review Insurance
Appreciating the value of regularly reviewing insurance policies is fundamental to preserving our long-term security. It’s not just about paying premiums on time but also about understanding the coverage and ensuring it aligns with current needs. Life situations change, and so do insurance requirements. For instance, a homeowner’s policy purchased a decade ago may not cover recent home improvements. Similarly, an auto insurance policy might need updating to reflect a new vehicle or changes in driving habits.
An annual review of all insurance policies, including health, life, auto, and home, is advisable. This practice helps identify gaps in coverage, opportunities for discounts, and areas where coverage might be excessive. Doing this can optimize insurance costs and ensure adequate protection against unforeseen events.
9. Build an Emergency Fund
Appreciating the value of having funds available for emergencies is essential to our financial planning. The safety net catches you when unexpected expenses arise, such as car repairs, medical emergencies, or sudden job loss. Start by setting a goal for three to six months’ living expenses. Then, allocate a portion of your monthly income towards this fund.
It might seem not easy at first, but every little bit helps. Over time, you’ll see your fund grow, providing you with a sense of security and peace of mind. Like a sturdy ship in a storm, an emergency fund can keep you afloat when financial waves come crashing. It’s not a luxury but a necessity for everyone striving for a sound financial future.
10. Diversify Investments
Diversifying investments is a smart move in the financial world. Think of it as spreading your eggs across multiple baskets. If one basket falls, not all eggs are lost. It’s about investing in a mix of assets like stocks, bonds, and real estate to reduce risk. If one market sector takes a hit, others may perform well, balancing the impact.
It’s not a guarantee against loss, but it’s a strategy that can help smooth out the ups and downs of the market. It’s a journey that requires patience and a clear understanding of your financial goals. Tools like robo-advisors can help manage a diversified portfolio, making the process more accessible for everyone.
Jason Butler is the owner of My Money Chronicles, a website where he discusses personal finance, side hustles, travel, and more. Jason is from Atlanta, Georgia. He graduated from Savannah State University with his BA in Marketing. Jason has been featured in Forbes, Discover, and Investopedia.