Get your finances sorted in 7 easy steps

Mon, Nov 1, 2010

Budgeting, Financial Advice

“I love you but it’s not my job to fix your finances.”
-Charlotte, Sex and the City

Charlotte says what a lot of people think. You know your finances aren’t just going to fix themselves, and it’s a rare friend or relative who’ll make the effort to sort out your financial mess for you. Thankfully for most of us there’s the Internet, and more specifically, us here at Needmoney.com. Here are 7 easy steps towards getting your finances sorted once and for all.

1. Prepare a monthly budget:

You need to review your budget and check on your bills/outgoings at least once a month as they’ll change over time. Your budget will need to be changed to accommodate these fluctuations. So that you don’t have to go into overdraft/borrow money, it’s best to make necessary adjustments by manipulating your level of expenditure on other outgoings. Try to build some flexibility into your initial budget so that it’s easier to adjust amounts later to deal with such changes.

2. Pay your bills as soon as you receive them:

If you don’t have payments pending on your overdraft or credit cards (debts you will be charged interest on), pay your bills as soon as you receive them.

Pay particular attention to bills you receive notification of electronically. It’s easy to accidentally pay them twice through carelessness, or because you’ve received duplicate notification. Also, keep an eye on automatic payments to ensure they go through and that your creditors are receiving them.

3. Get rid of debt:

Keep track of the total amount of your debt. Document pending debt, interest rates charged, and minimum monthly payments to be made. Tackle the cards with the highest interest rates first. Transfer balances from high interest rate cards to low interest rate cards.

You may be tempted to pay credit card debts off with a home-equity loan. The trap to avoid here is paying the cards off only to run up debt on them again, leaving you in a situation worse than your original one. Debt consolidation is a better option.

4. Verify your insurance cover. Make sure it’s justified and appropriate.

An insurance planner can be useful to help evaluate your needs according to your requirements. You don’t want to be paying for car, contents, or medical insurance beyond what’s really necessary. It’s also important to know exactly what you are and aren’t covered for.

5. Evaluate your retirement plan:

Take stock of your retirement plan with the following thoughts in mind:
– What is the value of my investments today?
– How much money do I save each month?
– What is the average rate of return I can generate on my investments until I reach retirement?
– What will my investment portfolio be worth at retirement based on those assumptions?

6. Use financial software to track your money:

Financial software can be highly useful and beneficial for personal money management. It will help you to keep track of your daily expenses and avoid making late payments. Pay your bills, make deposits, and transfer funds on time and avoid late fee charges.

7. Bank online:

Banking online reduces paper work and waste. It’s easy to sign up with your bank for an online account, and it will make paying bills and expenses a snap. It will also help to track your money as you can check on transactions in real time, and don’t have to wait on the post.

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