Ways to love your money

Thu, 2013-03-21 12:07

Author(s): 

Anonymous

Here is a clear and simple guide on how to live happily within your means, manage budgets and use financial services wisely. Now is the time to make the most of your money and develop a plan for this phase of your financial life. Enjoy your life; love your money.

Savings

Pay yourself first. You’re probably inclined to pay everyone else first. You may even still be supporting children or other dependents. But it’s vital to start paying yourself first by saving money. It’s the only way to ensure your financial longevity and well being. Most banks can automatically transfer funds from your checking account to your savings account, money market, mutual fund and other accounts. Automatic deposit makes the payment a habit you can maintain.

Join retirement savings programme if you do not have one from your employer. Plan immediately and max out the amount you can contribute. Also make sure you’re setting aside enough to be eligible for any matching funds — extra money for your retirement fund— given by many employers. Saving is so crucial, the government even encourages it if you’re a low-income worker. If you qualify, you can get a federal tax credit, depending on your income and how much you put into retirement programs.

Make sure you know the details about your bank’s savings account plans.

 Delay before you pay

This doesn’t mean pay bills late. It means stop yourself before you buy. Online shopping has taken impulse buying to new levels. Give yourself a timeframe before you decide to commit to a purchase. Think over that new pair of shoes for two weeks. If, after two weeks, you still can’t live without them, make room in your budget before you buy. Once you decide to start saving, you need to determine where you’re going to put the money. And remember “under the mattress” doesn’t count. Several common savings options include: Savings accounts, money market accounts, certificates of Deposit (CDs). Some of the most important considerations in choosing a savings vehicle include: Access. How quickly can you access your money?; Safety. How safe is your money? Is it federally insured?; Interest. How much money will you earn?; What are the interest rates and terms? Limitations. Are there minimum balances required? Are there limited checks that can be written per month or penalties for early withdrawals?

 Start now

Even if you can only put aside a small amount at first, the sooner you start, the faster your savings will accumulate. For every five years you delay, you may need to double your monthly savings amount to achieve the same income at retirement.

Budgeting

Live happily within your means.

You want to love your money, right? Then you’ve got to live well within your means. That’s important at any age, but it’s especially important when planning for retirement, which often demands that you live on a fixed income. Not to mention that many of us are enjoying longer, healthier lives. Living more years means needing more money and stretching our dollars. The best way to stretch, save and spend wisely is to build a budget. Only 40 percent of Americans use a budget to plan their spending.1 But 60 percent

of Americans routinely spend more than they can afford. A budget’s end goal isn’t to punish you, keep you from enjoying your golden years or make you miserable. It’s to keep your dreams of the moment and your long-term goals truly alive and golden.

 Question your needs and wants

What do you want? What do you really need? Evaluate your current financial situation. Take a look at the big picture. Make two lists – one for needs and one for wants. As you make the list, ask yourself: Why do I want it?; How would things be different if I had it?; What other things would change if I had it? (for better or worse); Which things are truly important to me?;  Does this match my values? And what will I need to live happily.

 Set guidelines

We all have different budgets based on our needs and wants. But this chart shows some guidelines on how much should go toward different expenses. It’s especially useful as you plan for retirementand living expenses. You may need to make adjustments for a daily latte fix or visits to children living on the other side of the country, but remember to subtract amounts from other areas if you do. Add up your income: To set a monthly budget, you need to know what’s coming in. Make sure you include all sources of income such as salaries, interest, retirement accounts, Social Security, pensions, and any other income sources. Estimate expenses: The best way to do this is to write down every penny you spend each month. Once you’ve created your budget, keep records of your actual income and expenses. This keeps you aware of the difference between what you budget and actually spend.

 Track, trim and target

Once you start tracking, you may be surprised to find you spend a month things that you don’t really need or long calls to the grand kids. Some expenses are easily trimmed. Cutting back is usually a better place to start than completely cutting out. Be realistic. It will help you to be better prepared for unexpected costs.