Some people only have between $1,000 and $5,000 in their savings account. In fact, 39% of Americans don’t have enough money on hand for a $400 emergency.
Don’t neglect your financial plan this year! Instead, use these 10 pieces of financial advice. With these 10 tips, you’ll have peace of mind.
You can prepare yourself for any financial emergency and set your finances up for long-term success.
Don’t leave your savings account covered in cobwebs. Instead, start putting more money in the bank with these 10 easy tips today.
1. Start Investing
Don’t leave your money sitting around. Instead, consider using a portion of the money you have saved to invest. In fact, more than half of US households have some investment in the stock market.
You can get a return on the money you have and put it toward a new home, car, or an emergency.
Investing is inherently risky. However, many apps are available to make it easy. You can also work with a financial planner for help.
It helps to start investing as early as possible. Compound earnings will allow your account to grow over time. You’ll have an easier time riding out any ups and downs in the stock market, too.
First, determine how much money you want to invest. It helps to consider a goal. For example, many people invest to put money toward their retirement.
Aim to invest between 10% to 15% of your income each year toward your retirement.
Then, open an investment account. You can invest using a traditional or Roth IRA.
Take the time to learn more about your investing options, such as stocks, bonds, or mutual funds.
Then, develop an investment strategy. You can find more financial advice for investing online.
2. Start Saving
You never know when an emergency might strike. As you use these finance tips, make an effort to save money. Saving money can help you prepare for an emergency or major expense.
First, track your spending for a month. Gather your pay stubs, bank statements, bills, and receipts. Compare how much you spend versus how much you make each month.
Then, create an Excel spreadsheet to study your spending. You can break your expenses into categories, including:
- Clothing
- Food
- Rent/mortgage and utilities
- Debts
- Medical
- Transportation/travel
- Entertainment
- Miscellaneous
Make sure you’re honest about your spending habits.
Then, determine your wants versus needs. Which “wants” can you remove from your monthly spending?
Consider using the 50/20/30 rule. You can put 50% of your income toward essentials, then 20% toward savings. The remaining 30% is for non-essentials.
Then, make an effort to put more money in your savings account.
Track your progress along the way. Determine what strategies are helping you save. For example, you can give yourself a weekly allowance in cash.
Using cash will allow you to watch the money disappear. You’ll feel obligated to avoid spending as a result.
3. Don’t Fear Credit Cards
Don’t fear using a credit card. Using a credit card can help build your credit score.
A debit card, on the other hand, won’t help you build credit.
When choosing a credit card, look for one that offers rewards. Try to choose one that best suits your lifestyle. Make sure it’s accepted everywhere you shop, too.
4. Make a Move
Take a look at your monthly spending again. How much do you spend on living expenses? Consider moving somewhere cheaper to save money this year.
Look for places to live that have a lower cost of living. Try to live below your means, too.
Then, you can save money instead of overspending on rent or a mortgage.
Remember, a down payment on a home isn’t an investment.
5. Pay Cash
Buying a new car isn’t an investment, either. It will lose value the minute you drive off the lot. Make sure you don’t pay more than you can afford for a car.
Instead, try to pay cash if you can. Otherwise, finance it in a way that won’t cause a debt headache.
When buying a card, put 20% down to avoid long loan terms. Make sure you determine your credit score beforehand. If your credit score isn’t ideal, look to a credit union to get a financing quote.
6. Get a Side Hustle
One of the best pieces of financial advice you can use this year is to find a side hustle. Finding a side hustle can provide you with pocket money. It can help you build your savings, too.
Here are a few side hustles you can do in your spare time:
- Medical transcription
- At-home customer service
- Translator
- Search engine evaluator
- Babysitting or pet sitting
- Dog walker
- Delivery person
- Uber or Lyft
- Handyman
- Computer repair
- Tutoring
- Graphic design
- Sell possessions on Facebook, eBay, Amazon, or Craigslist
- Virtual assistant
- Freelance writer
- Fiverr
Choose a hustle that suits your schedule and talents!
7. Establish a Budget
Once you determine your monthly spending habits, set a budget for yourself. Then, stick with it.
Learning how to create a financial plan can benefit you in the long run. It can take a little practice to remain within your budget, though. Try to remain patient with yourself along the way.
You can work with a financial advisor who can help achieve your financial goals, too.
8. Prepare for Emergencies
Create a separate savings account for emergencies. For example, you might need to pay for medical bills after an accident. If your car breaks down, you’ll need to pay for a major purchase.
Having an emergency account can give you peace of mind.
9. Cut Back
Look for ways to cut back on your monthly spending. For example, you can plan your meals for a week. Only spend money on groceries you need.
Avoid eating out for the month, too.
You can also turn off your monthly subscriptions, including Netflix, Amazon Prime, and HelloFresh.
Put that money toward your savings account instead.
10. Pay Off Debts
The average American has over $90,000 in debt. Work to pay off your debts this year, including your:
- Auto loans
- Mortgage loans
- Student loans
- Credit cards
- Home equity lines of credit
- Personal loans
Use the avalanche method to pay off these loans. Start with the debt that has the largest interest rate. Then, work your way down.
Save Yourself Stress: 10 Pieces of Financial Advice for 2021
Building a financial plan doesn’t have to feel stressful. Instead, use these 10 pieces of financial advice. With these tips, you can save instead of spending.
You’ll have peace of mind knowing you’re ready for any emergency.
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