Did you know that a shocking number of Americans don’t have enough money in savings to account for unexpected accidents?
Research from the Wall Street Journal suggests that a majority of Americans would not choose to use their savings in such a situation. Instead, people are more inclined to borrow from friends or use credit lines.
Financial adequacy and readiness are major issues for many individuals. And unfortunately, many people don’t consider potential options should they ever find themselves in unfortunate circumstances. So many Americans struggle with a lack of financial security daily.
A lot of this has to do with not knowing the options available to you. If you don’t know where to grow or how to grow your money, how can you expect to get more savings.
We, as Americans, are particularly bad at handling our credit card debt. For instance, a recent report published by The Atlantic chronicled global debt statistics for households with credit card debt, and the United States came out (overwhelmingly) on top.
Clearly, we all need just a little, or maybe a lot of help with our personal finances. One of the best ways to prevent or prepare yourself for financial hardships is by educating yourself.
Personal finance 101: don’t want to spend more money than you have. While this may sound obvious, unfortunately, budgeting is something many people struggle to accomplish. Good budgeting skills are an absolute must and if you’re terrible at it right now, it’s never too late to start. Check out some popular online programs like Mint or “You Need a Budget” (YNAB). These will track your spending and how you break differentiate between your needs and wants with helpful visualizations.
The amount doesn’t matter. I don’t know about you, but I’m all about the rewards of delayed gratification. Think about it this way, if you know you have a problem with spending, why not remove the temptation to spend unnecessarily by moving money into your savings account?
You’re already giving away a bit of your income all the time to taxes, social security, food, utilities and so forth. Why not put some money into savings? The amount doesn’t matter, even as little as $25 per month can make a difference.
Saving up for a new house? That car isn’t going to buy itself either. In order to get anything that requires a significant investment, you need to lead with a financial action plan. Taking a deep-dive into typical monthly expenses, future investment goals, and growth opportunities will help you set a realistic roadmap for your finances.
Look, the truth is, life may throw unexpected challenges and costs at you. What are the best choices to set up your emergency fund with. As always, a FDIC-insured savings account is safe choice, but CDs and I-bonds might be good to consider too.
Interest is one of those things that’s great when you’re on the receiving end of it, but terrible when you’re on the end that’s giving it up. Many people get too caught up in the daily rhythm of their lives to stop and really think about how to approach debt.
At the very least your main focus needs to be to stop the bleeding. Using tools like YNAB will help you see where your spending is really costing you and adjust so you don’t get any new debt you don’t need to take on.
Before you know it, you’re stuck with mounting debt along with sky-high interest rates, all because you were a bit disorganized. Worry not. With a little bit of self-control and persistence you can probably get yourself out that financial hole.
One strategy you can use is prioritizing the debts with the highest interest rates first. With this approach, you won’t need to deal with only paying interest with your hard earned money. There’s some more details to this process, but it’s extremely effective for those people stuck with a lot of high interest debts, check it out.
The snowball method is an interesting approach that directly contradicts the avalanche method. With the snowball method, you’ll be organizing your debts again, but this time in by the smallest debts first. It’s a good way to motivate yourself, but be careful of leaving higher-interest debts active for too long.
This one’s pretty simple, a Google search on the state regulations and knowing your own financial situation will do the trick. Hey look, the state government of New York even helps clear everything up for you online — pretty convenient if you ask me.
The earlier you can contribute to your retirement fund, the better. Most professionals choose to invest in either a The most common types are probably something you’ve heard many a 401(k) or Roth IRA. The IRS provides a list of comprehensive resources on what a 401(k) entails and how you can take advantage of it and plan for your future.
An IRA stands for “Individual Retirement Account.” It’s useful to have one even if you have a 401(k) plan because you get favorable tax treatment on parts of your income. Take a moment to look at this wiki about IRAs in general and the two main types: the traditional and the Roth IRA.
Following through with these tips will help you make solid financial decisions and investments. While the rewards seem far and the efforts great, know that successful personal finance is very possible.
David Wither is a leadership and startup coach with over 15 years of experience. He has been published in Huffington Post, Business2Community, and Business.com