Being financially successful means that you control your money rather than it controlling you. Your income does not always determine your financial success; your choices and priorities do. Financial success may seem like a distant dream if you are struggling, but by following these ten steps, you can make that dream a reality.
Although making financial resolutions is a good idea at any time of year, many people find it easier to do so at the start of a new year. The fundamentals remain the same, regardless of when you begin. Here are ten important money-saving tips.
1. Get Paid What You’re Worth and Spend Less Than You Earn
This first rule may appear simple, but many people struggle with it. Make sure you understand the market value of your job by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate for what you do, both inside and outside the company. Even a $1,000 annual pay cut can have a significant cumulative effect over the course of your working life.
You’ll never get ahead if you spend more than you earn, no matter how much or how little you’re paid. Spending less is often easier than earning more, and a little cost-cutting effort in a variety of areas can result in savings. And it doesn’t always have to entail major sacrifices.
2. Maintain Your Budget
Budgeting is an important step to take when attempting to get ahead financially. After all, how can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? Whether you make thousands or hundreds of thousands of dollars per year, you must create a budget.
3. Clear Credit Card Debt
Credit card debt is the most significant financial impediment. Those little pieces of plastic are so easy to use that it’s easy to forget that we’re dealing with real money when we whip them out to pay for a purchase, big or small. Even when we resolve to pay off the balance as soon as possible, the reality is that we frequently fail to do so and end up paying far more for things than we would have paid if we had used cash.
4. Make a contribution to a retirement plan
If your employer provides a 401(k) plan (or another type of employer-sponsored retirement savings program), you should contribute if you can. When it comes to 401(k) plans, your employer will often match your contributions up to a certain percentage. This is known as an “employer match.” If your employer does not provide a retirement plan, consider opening an IRA.
5. Have a Savings Strategy
You’ve probably heard this before: pay yourself first. You’ll never have a healthy savings account or investments if you wait until you’ve met all of your other financial obligations before looking at what’s left over. Make a commitment to save at least 5% of your salary before you begin paying your bills. Better yet, have money deducted from your paycheck and deposited into a separate account automatically.
If you can manage to put money into other investments while contributing to a retirement plan and a savings account, that’s even better.
7. Increase Your Employment Benefits
Employment benefits such as a 401(k) plan, flexible spending accounts, medical and dental insurance, and so on are extremely valuable. Make sure you’re taking advantage of all of them and maximizing the ones that can save you money by lowering taxes or out-of-pocket expenses.
8. Examine Your Insurance Policies
Too many people are persuaded to pay too much for life and disability insurance, whether by including these coverages in car loans, purchasing whole-life insurance policies when term-life insurance makes more sense or purchasing life insurance when they have no dependents. However, it is critical that you have enough insurance to protect your dependents and your income in the event of death or disability.
9. Reevaluate Your Will
Only 33% of Americans had a will in 2021. If you have dependents, regardless of how little or how much you own, you must have a will. If your situation isn’t too complicated, you can even do it yourself with software like Nolo’s Quicken WillMaker. Consider writing a will to better protect your loved ones.
10. Maintain Accurate Records
If you don’t keep meticulous records, you’re probably not claiming all of your allowable income tax deductions and credits. Set up a system now and use it throughout the year. It’s far more convenient than scrambling to find everything during tax season, only to overlook items that could have saved you money.
How are you doing on the checklist above? If you aren’t doing at least six of the ten, make a resolution to improve. Choose one area at a time and aim to implement all ten into your daily routine.