10 Tips To Personal Finance Management

You work hard for your money and you want to make it go the distance. As hard as you try it seems to never work the way you think it should. Don’t worry, you are not alone. Studies show that American’s have the lowest savings rates in the developed world while carrying the highest debt loads. Why not follow these 10 tips to personal finance management and become a pro at managing your finances!

1. Pay Yourself - The very first thing you need to do is pay yourself 10% of each paycheck to put away in a retirement plan. It doesn’t matter if you already have a plan at work, you still need to work towards your own financial freedom in the future. The object of working every day isn’t just about paying the bills, if you can’t put away some money for the future what’s the point of working so hard? So you get paid first and then everyone else does.

2. Emergency Fund - You should have an emergency fund that covers preferably six months income but at minimum at least three months. This isn’t the fund you use to buy that beautiful new coat or take a vacation. This is truly an emergency fund should you lose your job or become sick and unable to work this six month fund will buy you some time to get your finances in order.

3. Employer Retirement Plans - If the company you work for offers a retirement plan such as a 401(k)plan be sure to participate. Most plans take 5 to 10% off your check. It’s a simple and easy way to prepare for your retirement years. You won’t miss what you don’t have to spend.

4. Reduce Debt - One of the most important things you can do for your financial situation is to reduce your debt. Start by paying off the credit cards that have the highest interest rate. Make your minimum payments on the lower debts and pay extra against the highest debt until you’ve paid it off. Don’t make the mistake of reusing those cards.

5. Prepare A Budget - A budget outlines what your expenses are and what you need to pay. Draw up a budget and then make sure you stick to it. You’ll need to know your total household income and your total household expenditures. What you have left over is yours to spend how you like.

6. Avoid Cash - Cash is the hardest expense to track. It seems like you’ve got $50 in your wallet and next thing you’ve got 50 cents. The best way is to avoid using cash. Pay by check or debit card, or use one credit card as cash and then pay it off at the end of the month so it accumulates no interest. If you are going to pay by cash you need to keep a spending journal that details where every penny goes.

7. Leave Your Retirement Funds Alone - Never borrow from your retirement funds. If your draw this money out early you will penalized heavily on taxes and it won’t be there for when you get older and want to retire. You are much better off having a separate savings account with a couple of thousand dollars in it that you can use if you need. Then if you don’t spend it you can invest it into your retirement fund at the end of the year.

8. Don’t Charge - Unless it is absolutely necessary don’t put purchases on your credit card. It is especially important not to buy groceries or necessities using your credit card. By the time you pay off the balance and the interest is added those will have been very expensive groceries. It’s the same when you see that outfit on sale at such a good price you just have to charge it. Is it really a great price after the interest is added on? You are better off avoiding the use of your credit cards if at all possible.

9. Get The Best Deal - Shop around for the best interest rates on credit cards, mortgages, and loans. You should also shop around for the best bank plans. Some banks offer no or low fees, some offer a fixed monthly fee with unlimited access. If you are going to have money in a savings account shop around for the bank that pays the best interest rate on your balance.

10. Don’t Be The Jones’s - You don’t need to be like the Jones’s. Just because your neighbor bought a new car, or your best friend bought the most gorgeous boots you’ve ever seen, doesn’t mean you have to. It’s tough to not feel compelled to keep up with everyone else but it’s the single most reason you’ll get into financial trouble. So take care of your expenses first, pay down your debt, and if there’s some free money left then by all means have some fun.

Following these 10 tips to personal financial management might seem like a bit of a drag right now, but you’ll be in a much better financial position than your friends in just a few years, and by the time retirement arrives you will have the money and the freedom to do what you want.

Aura Mirchandani is the Editor and Publisher of Article Click. For more FREE articles for your ezine and websites visit ArticleClick.com. Article Click is a free content article directory.