16 Small Steps You Can Take Now to Enhance Your Funds

Finances

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You have all sorts of financial goals that you want to achieve, but where should you start? There are so many different aspects of money management that it can be difficult to find a starting point to achieve financial success. When you feel lost and overwhelmed, take a deep breath. Progress can be made in small, manageable steps. Here are 16 little things you can do right now to improve your overall financial health. (See Also: These 13 Numbers Are Critical To Understanding Your Finances)

1. Create a household budget

The biggest step to effective money management is creating a household budget. First, you need to find out exactly how much money is coming in each month. Once you have that number, organize your budget around financial priorities: essential living expenses, retirement contributions, debt repayment, and any entertainment or lifestyle expenses. Having a clear picture of how much is coming in and going out each month is key to achieving your financial goals.

2. Calculate your net worth

Put simply, your net worth is the sum of your assets minus your debts and liabilities. They have a positive or negative number. If the number is positive then you are on the rise. If the number is negative – which is especially common with young people who are just starting out – you need to keep reducing the debt.

Remember that certain assets, like your home, count on both sides of the ledger. While you may have mortgage debt, those are backed by the resale value of your home. (See Also: 10 Ways To Grow Your Net Worth This Year)

3. Check your credit reports

Your credit rating determines your credit score, including the interest rates you pay on loans and credit cards. It can also affect your job opportunities and life options. Every 12 months, you can check your credit report from any of the three major credit reporting agencies (Experian, TransUnion, and Equifax) for free at annualcreditreport.com. It can also be a good idea to get a report from someone every four months so you can keep track of your balance year-round without paying for it.

Regularly reviewing your credit report will help you keep track of any account on your behalf and may alert you to fraudulent activity.

4. Check your credit history

Your FICO score can range from 300 to 850. The higher the score, the better. Remember that two of the most important factors that go into your creditworthiness are your payment history, particularly negative information and how much debt you owe: the type of debt and how much credit you have in your given time. (See Also: How To Boost Your Credit In Just 30 Days)

5. Set a monthly savings amount

By transferring a certain amount of money to a savings account while paying your other monthly bills at the same time, you can ensure that you are regularly and consciously saving money for the future. Waiting to see if you have any cash left after paying all other voluntary lifestyle expenses can result in unequal amounts or no savings at all.

6. Make minimum payments on all debts

The first step in maintaining good credit is to avoid late payments. Build your debt reduction minimum payments into your budget. Then, look for additional cash that you can use to pay off the debt capital. (See Also: The Fastest Way to Pay Off $ 10,000 In Credit Card Debt)

7. Increase your retirement savings ratio by 1 percent

Your retirement assets and your savings rate are the most important determinants of your overall financial success. Make an effort to save 15 percent of your income for retirement for most of your career, and that includes any employer grants you may receive. If you are not already saving this amount, plan in advance how you can achieve this goal. For example, increase your savings rate every time you receive a bonus or raise.

8. Open an IRA

An IRA is a simple and accessible retirement vehicle that anyone with an income can access (although you cannot contribute to a traditional IRA after the age of 70½). Unlike an employer-sponsored account like a 401 (k), an IRA gives you access to unlimited investment opportunities and is not tied to a specific employer. (See Also: Stop Believing These 5 Myths About IRAs)

9. Update your account beneficiaries

Certain assets, like retirement accounts and insurance policies, have their own beneficiary names and are allocated based on who you have listed on those documents – not necessarily according to your estate planning documents. Check this out every year and every time you have a major life event, like a marriage.

10. Review your benefits

The monetary value of your employment includes your salary and other employer-provided benefits. Think of these extras as part of your wealth building tools and review them annually. For example, a Flexible Spending Scheme (FSA) can help pay ongoing healthcare bills through your employer, and a Health Savings Account (HSA) can help you pay for medical bills now and in retirement. (See Also: 8 Myths About Health Savings Accounts Debunked!)

11. Check your W-4

The W-4 form you filled out when you started out determines how much your employer withholds for taxes – and you can make changes to it. If you’re getting a refund at tax time, adjusting your tax withholding can be an easy way to increase your take-home salary. Also, remember to review this form whenever you have an important life event, such as getting married or having a child. (See also: Are You Keeping The Correct Tax Amount On Your Paycheck?)

12. Think about your life insurance needs

Generally, if someone is dependent on your income, you will need life insurance. When determining your insurance needs, consider protecting assets and paying all outstanding debts, as well as retirement and tuition fees. (See Also: 15 Surprising Insurance Policies You Might Need)

13. Check your FDIC insurance coverage

First of all, make sure the banking institutions you use are FDIC insured. For credit unions, you should certify that they are a federal institution of the National Credit Union Administration (NCUA). Federal deposit insurance protects up to $ 250,000 of your deposits for any type of bank account you have. To determine your balance with a single bank or different banks, visit FDIC.gov.

14. Check your social security statements

Set up an online account with SSA.gov to verify your work and income history and to get an idea of ​​what types of benefits you may be entitled to – including retirement and disability.

15. Set a financial goal to achieve by the end of the year

An important part of financial success is realizing what to focus your energy on in relation to specific financial goals, such as a fully funded emergency account.

If you are overwhelmed by achieving all of your goals at once, choose one to focus on and achieve it by the end of the year. Examples include paying a credit card, contributing to an IRA, or saving $ 500.

16. Take a month off

Unfortunately, you can never take a break from paying your bills, but you have complete control over how you spend your disposable income. And this is the only way you can achieve some of your savings goals. Try cutting some of your lifestyle spending for just a month to cushion your checking or savings account. You could start by bringing your own lunch to work each day or planning a meal for the week to keep your grocery bills lower and to avoid eating out. (See also: How a Simple Don’t Buy List Keeps Money In Your Pocket)

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With the new year coming, it's time to take control of your financial goals. From creating a household budget to calculating your net worth, or setting a monthly savings amount, we have 16 small steps you can take to improve your finances. | #personalfinance #moneymatters #budgeting

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