Managing your personal finances is a very important responsibility that all people share. Unfortunately, many people will find that keeping track of their finances can be time consuming, expensive, and frustrating. Fortunately, there are five simple tips that can be followed to improve your personal finances.
One of the best ways to improve your personal finances is to increase your income. While saving money and being frugal is important, having a good amount of income coming in is a necessity to build personal wealth. Some great ways to do this can include asking for a raise at work, looking for a new and better paying job, or finding additional ways to make some extra money on the side. Even small increase in pay can add up significantly over time.
Save for Future:
To build a strong personal financial footing, you will need to be able to save money for the future. It is very important to consider both your short-term and long-term savings strategies. Ideally, you should be saving at least 20% of your income in short-term accounts and long-term retirement accounts. This will provide you with a source of liquidity to reach short-term goals while also building a nest egg to rely on in the future. It would also be a good idea to take advantage of tax-advantaged retirement accounts as much as possible.
Consider Mortgage Options:
For most people, the monthly mortgage payment is the largest monthly expense that people incur. Because of this you, should look for ways to better manage your mortgage payments. While interest rates today are a bit higher than they were in the past, you can still save a lot of money by refinancing into a lower-rate loan. Furthermore, you may want to consider switching into a loan that has a shorter amortization schedule and provides you with even lower interest rates.
Look for New Rates:
While higher interest rates have made it more expensive to borrower money, it has made it beneficial for individuals that are looking to save money. Today, you can find great rates with savings accounts and other low-risk investments. However, to take advantage of these low rates, you will need to be willing to shop around to find the best rates that are available to you today.
Once you have built up a comfortable emergency savings reserve, you should focus on investing your personal capital. Investing in the markets will allow you to see your capital increase in value. While investing can be a good option, it is important that you stay on top of your investments and strategy. You should carefully review and consider your investment strategy at least a few times per year and make adjustments as necessary.
If you are investing with an investment advisor, or if you invest through actively managed funds, you should also spending time reviewing the fees that you are paying to see if there is a more affordable way for you to invest. This could increase your ultimate ROI.