Read it, Learn It, Live it….

The older I get the more money aware I have become.  I find these things below time to time and I never tire of them.  However I have edited them slightly to bring it down to our level.  Good reminders of what I need to do financially, how I want to get there, most importantly, helping me to where I want to end up.

1.  Create a budget

Keep track of your income and expenses.  Create a budget and stick to it.  How much are you spending on impulse purchases?  These small income leaks add up to big dollars.  You want a real eye opener, write down everything you spend money on for one month right down to a stick of gum.  You’ll be embarrassed at the waste of money.  Don’t believe me, do it!

2.  Have a rainy-day fund

Before you buy that “fill in the blank”, make sure you have enough money in the bank to cover living expenses for three months.  Majority of adults do not have savings that can cover three months of their expenses.  No rainy-day fund means you may be one job loss or emergency away from serious financial harm.

3.  Pay off your credit cards

Pay off your credit card every month.  More than half of credit card holders carry an unpaid balance over the past year. 

4.  Pay your bills on time

When you don’t pay your bills on time, you negatively impact your credit score and can be subject late fees.  A bad credit score will result in much higher interest rates on your debt: credit cards, auto loans and mortgages.  Paying on time saves you money in the long term.

5.  Don’t spend more than you make

Once you get on the debt-financed spending path, it is very hard to recover.  Do you understand what a debt-financed spending path is?  It’s like using a credit card to pay bills!  It’s the fast lane to bankruptcy More than 1.5 million people filed for bankruptcy over the last year.  Avoid this road of debt and despair.

6.  Be careful with your mortgage

Before the Great Recession, some people were using homes like ATMs.  Homeowners refinanced or took out home equity loans to get cash.  This is one reason a quarter of all homeowners are now “underwater,” meaning they owe more on their homes than they are worth.  Don’t use your home like an ATM to buy new cars, go on vacations or anything you don’t need.  Home equity is great if you know how to respect it.

7.  Start thinking about retirement now

Know how much you need in savings for a comfortable retirement.  You are not too young to take the time to calculate how much money you will need to save to live comfortably in retirement.  Few Americans do this.  Don’t be one of them.  Another thing, ask a retired person about it, they’ll tell you.

8.  Start saving for retirement now

Start saving for retirement when you are young.  Some 60% of workers report that the total value of their household’s savings and investments, excluding the value of their home and pension plans, is less than $25,000.  That is pitiful.  Waiting till you’re 35 or 45 to start saving is too late.  The average Social Security individual benefit is less than $15,000 a year — not enough for a dream retirement.  Different folks have different dreams.

9.  Set your financial goals

Up to now, your goal has been getting a job.  Congratulations Jim, you have succeeded.  Now go out there and create some concrete financial goals such as paying off student loans, creating a rainy-day fund, putting money in a retirement plan, saving for a wedding, a trip, a car, or a down payment for a home.  One goal leads to another.

10.  Learn about personal finance

Throughout your life, you will face many challenging personal-finance final exams.  Will you pass?  You will, if you become financially sophisticated.  Do not be afraid to ask those that know.  Get to know a banker like a friend.  Get on a first name basis with him or her.  You want to get to a point with them where a simple phone call for a loan or advice is second nature.  You want to get to a point where all you do is tell them what you want, and they say, “find what you need and call me”.  That’s nice!

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