9 Tips to Get Your Finances in Order

 

Many people spend time on the weekends or during the week cleaning their house, putting things in order, throwing away things, organizing, updating, replacing and moving things around.  Some people do more extensive cleaning of their house when spring or the new year arrives.  Some people clean their house and donate unused items to charity.  Whatever the case – everyone cleans their house or place where their live but do you clean your finances?

Many people do not know how much money they earn, how much they spend or how much debt they owe. Organization is the key to getting your finances in order and cleaning your financial house.  Approximately seventy percent of Americans are living paycheck to paycheck.  In some instances people live paycheck to paycheck because they do not know where their money is going.  Here are 9 ways to help you get your finances or financial house in order and help you achieve your financial goals.

Increase Your Credit Score

Get a copy of your credit report at least once a year.  Get current on all late bills and dispute any errors.

Create a Budget

Create a budget or spending plan to determine how much you earn and how much you are spending.   Include savings in your budget.  Ensure that everyone in your family follows the budget. Track your spending daily, weekly or monthly. Use pen and paper, software or apps to assist you.

Reduce Spending

Reduce your expenses by determining areas where you can reduce spending by buying more needs vs. wants such as bringing your lunch to work, shopping at discount stores or buying generic brands. Call your service providers and ask about discounts or specials.

Pay Down Debt

Pay down debt and keep credit card balances at 20% or less of the limit which also helps increase your credit score.  Do not open any new accounts or incur any additional debt.

Establish an Emergency Savings Fund

Create an emergency fund to cover bills and monthly expenses for 12-18 months to prevent going into debt for unexpected expenses.

Plan for Retirement

Plan for retirement and contribute at least 20% towards a retirement fund each month.  Contribute to a retirement account through your employer or make automatic contributions to an IRA if you are self-employed or if your employer does not offer a retirement plan.

Pay on Time

Pay bills on time or before the due date to maintain good credit and increase your credit score.  Pay bills online or through automatic deduction to save money.

Assess Needs

Determine your needs for insurance such as life, health, disability and long-term care.  Make adjustments as needed on a yearly basis or when a life event change occurs such as divorce, death, long-term illness or childbirth. Bundle services with the same company to save money.

Get Organized

Organize all bills, financial statements, debt, and loans in separate folders.  Create a bill calendar to identify when each bill is due or create a list of keep track of bills.  Get a file cabinet, cash box or accordion folder to store receipts.   Tally receipts daily, weekly or monthly and track in your budget. Set alerts or reminder when bills are due and when account balances go below a certain limit.

March Madness and Your Finances

                                         

March Madness is always action packed and full of surprises. Everyone will be watching to see what teams are selected to play and the teams that advance to each round. With all this excitement about March Madness, consumers should use that same excitement to improve their financial situation. 

Some consumers go into debt watching March Madness: ordering cable sports packages, hosting game parties, going to sports bars to eat, drink and watch the games all day, buying tickets to live games, and buying sports memorabilia. All of these costs can add up and cause you to overspend.

The goal of basketball is getting the ball to go securely in the net to score points. 

The goal of improving your financial situation is getting out of debt, increasing your credit score and your liquidity.  If you are obsessed with watching March Madness you may be obsessed other things. This year use that obsession towards your finances. Use your tax refund to improve your financial situation. If you are spending more than you earn, living paycheck to paycheck or have little to no savings or retirement, here are 6 ways to improve your financial situation. 

1. Don’t hit an air ball – Many people file bankruptcy multiple times as an easy way to get out of debt. You should only file bankruptcy as a last resort. Filing for bankruptcy greatly lowers your credit score and remains on your credit report for 7-10 years.
2. Ball control – Manage your finances by reducing expenses and reducing debt. Taking control of your finances is key to developing good spending habits and reducing the change of having a financial crisis. The total amount of debt you owe contributes to 35% of your credit score.
3. Shoot for a basket – Set financial goals as part of your budget. Develop an action plan to achieve each goal. Creating a budget helps you live below your means, reducing your spending and reduces your chances of going into debt. Your total monthly debt excluding mortgage and car loan should be no more than 10% of your total monthly gross income. 
4. Don’t try to achieve a bury – A credit score or FICO score ranges from 300-850. Only a small percentage of Americans, less than 5% achieve a score in the 800’s. Focus on paying down debt, paying your bills on time and getting current on any late accounts. These actions will help increase your credit score. Don’t focus on getting a perfect credit score, focus on getting the best credit score you can.
5. Don’t stay cold – Many consumers have tried different methods on their own to get out of debt. If you are unable to improve your situation on your own, don’t stay cold – get professional help from a credit counselor, financial coach or financial planner.
6. Avoid disqualification – You can lose your job or get disqualified from a job by having bad credit. Bad credit can also prevent you from being approved for a loan or line or credit.

Be the CEO of Your Finances

                                                    

Women earn approximately $.74 for every dollar a man earns and pay over $426 billion a year on hair, nails, toiletries, and beauty products. Women pay more than men for services such as hair salon, dry cleaning, insurance, housing and healthcare. Unfortunately there is no federal law banning gender pricing which varies by state to state.

Earning less money and mishandling their finances puts women at risk for financial failure.  If you mismanage your finances these bad habits can carry over in other areas of your life. When your finances are out of balance so are other areas of your life such as your career, relationships, family and health.

Managing your finances properly requires discipline, attention to detail, organization skills, strategic planning, sacrifice, and logic skills. These skills are also useful in other areas of your life. Being the CEO of your finances reduces stress, anxiety, sadness, frustration and anger and helps keep your life in balance.

Since women make less, have to pay more, live longer or may be forced into a life changing event be the CEO boss of your finances by following these 7 steps.

Track Spending

Spend less than you earn. Create a budget to track and control spending. Subtract your monthly expenses and debt from your total monthly income after taxes.  If you have less than5% left over make some adjustments.  Make your budget flexible to accommodate for unexpected expenses and include savings goals.  Set short-term and long-term goals such as paying off a bill and saving for a down payment on a house. Create an emergency fund to cover monthly bills and expenses for 9-12 months. Balance your checkbook and write down or verify every transaction, including check card transactions and trips to the ATM. Spread spending for large purchases over several months to ease the burden. Reduce spending by 30% to reduce financial risks. Downsize or downgrade your lifestyle if you are experiencing a financial crisis.  

Get Coverage

Insurance is a form of protection against loss, damage or theft.  Insurance should provide enough to reimburse for loss or damages. The basic types of insurance everyone should have are: health, life and disability especially if you have children. Health insurance is needed if need medical services or need to go to the emergency room. Disability insurance is used if you have a short-term or long-term medical condition that prevents you from working and ensures that you still continue to receive a paycheck, usually at least 60% of your salary. Life insurance is used in the event a family member dies and should at least be enough to cover burial expenses.

Insurance needs grow as you get older so ensure your coverage and beneficiary information remain current. Buying insurance will save you money in the future and help you get over any financial crisis you may experience.  You may not see the immediate benefit of buying insurance but in the long run you will be glad you did.

Don’t be a Sponsor

Avoid loaning money to others including your children even if you can afford it - especially if you are the person who earns the highest salary in your social network.  Don’t loan money if you want the money paid back. If a person mismanages their finances loaning money will only enable them to continue their bad money habits. Instead, offer to pay for them to attend a financial course or buy them a self-help financial book.

Slash Debt

Pay down debt and get current on late accounts.  Keep debt excluding rent or mortgage at 15% or less of your net monthly income. Keep credit card balances at 20% or less of the credit limit. Pay more than the minimum monthly payment. Stay current when paying back student loans or consider using student loan forgiveness programs. Pay with cash instead of credit cards to reduce your chances of going into debt. Keep an emergency fund to prevent you from going into debt. Plan for the unexpected and always have a plan A, B and C.

Boost Income

Go back to school to further your education to boost your salary. Many employers offer free or discounted training so take advantage.  Keep a copy of each certificate in your employee file. Skip getting a tax refund and adjust your withholdings to get your money throughout the year.  Get an additional stream of income such as a part-time job, invest in a profitable business or start a business.

Monitor Credit

Keep good credit. Whether right or wrong - credit is used to judge your character and affects your ability to get hired for a job, get insurance or get approval for credit.  Women are more likely to carry a balance, pay the minimum payment on their credit cards and be charged a late fee.  Women are less likely to pay their credit card balance in full each month and comparison shop for credit cards. Pay your bills on time or setup payment arrangements to maintain a good relationship with your creditors. Review your credit report at least once a year and at least 3 months before making a big purchase such as buying a car or home or starting a business.

Know Your Worth

Know your worth. Know your worth in your job industry and ensure you are getting paid what you deserve. Unfortunately, many women do not ask for a raise which directly affects their economic status. Avoid being shy and ask for what you want.  Notify your direct supervisor and their supervisor about your top skills and key accomplishments each quarter.  Maximize employee benefits and monitor your benefits package.  Keep abreast of the vesting rules and updates regarding your retirement plan.