TAKE CONTROL OF YOUR FINANCES
Understand Your Finances:
Its always easy to want to put your finances in Order but If you have no Idea what You are spending your money on then its impossible to fix the issue. For this I am using an awesome personal finance tool called Personal capital .
You have the ability to add all Your financial accounts and it puts together a n aggregate display of your financials. This will help you understand the overall health of your finances.
Planning and budgeting :
Budgeting is very Important when trying to achieve any financial independence. Having a breakdown of what you are spending your money on will make you understand where you need to cut back.
I am not a good budgeteer so I try to divide my money in different accounts that i use to spend on specific needs. You may use a spreadsheet or put your money in different envelops for different needs and that will help you manage your finances much better.
Maximize your employer offered retirement account:
IF your Employer offers retirement benefits like 401K and or 401k ROTH with matching, Its alway a good idea to max your 401K contribution at least to take advantage of the match. Every one loves free money and not taking advantage of the matching is like leaving money on the table but also it helps in improving your retirement account.
PAY yourself :
The best way to reduce your spending is to not have the money to spend. Making a habit of paying yourself first before any bills or expenses goes a long way towards your financial success.
You don’t have To start with paying yourself a lot. Just start but 3% of your paycheck and gradually increase the percentage as time goes by.
Pay OFF your debt:
Reducing the amount of interest you are paying to debtors is always a good Idea. I like starting with the bills that have the highest interest rate.
The less the interest rate you have to pay on you debt the more disposable money you have for saving and investing. Go through all your debt and make a plan of which debt has the most interest and tackle that first.
Build an EMERGENCY fund:
Start building an emergency fund for the money you pay yourself. I recommend having at least six to twelve months of you monthly expenses saved up.
There are some really good High yield savings accounts that you can use for your emergency fund and get paid 2% annual yield on your money which is a pretty good deal.
Invest your suplus money:
Put your money to work for you. The best was to grow your money is to make sure that You are getting the most out of your money. Here are Graphs comparing Putting your money is a regular savings account verses investing in a low cost index fund.
Example of growth in a regular savings account over the period of seven years
Example of growth in a low cost index fund for a duration of seven years
