It’s time for spring-cleaning around the house. You’re getting a handle on the hidden dust in the closet and making sure that the ceiling fans are free from debris. But what about your finances? Could they too use a little spring- cleaning? Here are five ways to take a good hard look at your finances and make sure that your money is working for you.
Where is your money? If you haven’t already, open a basic bank account. Shop around and find the best deal on the cost, including lower fees and potential benefits. Keeping your money at the bank gives it the opportunity to grow while keeping you more organized.
If you don’t need to open a basic bank account, make sure your money is in the best place possible. Checking and savings accounts are not all created equal. You want to make sure that your money is consistently growing with the highest possible interest rate available for your funds. Investing time into searching for the right current accounts is well worth the effort it takes.
Debt is placing your finances in jeopardy. Instead of being able to grow your money and increase the amount you have in the bank, you are being drained of a monthly payment that includes interest. Someone else is making money while you are paying for debt. The longer it takes to pay off, the more money you are losing.
Paying off the debt quickly gives you the opportunity to put your money to work for you. Instead of making a credit card payment to someone else, you can choose to put the funds into a savings account, a 401(k), a money market account, or even a CD. Now, you are earning interest on the balance and things have taken a positive turn.
Your spending habits may need a little spring-cleaning. Do you know how much you spend on entertainment each month? Are you getting the best rates for your car insurance or cable bill? In order to fix your finances, you need to know where all of the money goes.
Many people look to a budget as a way to fix their finances. Different categories are allotted a certain amount of money and when that money is gone, there is no more spending. This monthly guideline includes goals like saving and investing and consistently gives a person an overall view of their finances.
After cleaning up your finances, it is time to make sure that your money is put to good use by making smart investment choices. While a typical savings account is an okay place to store money that you need constant access to, look into other ways to grow your money. If you want to take risks, you may be able to invest in something that offers you larger returns. If you want to play it safe, you can invest in something that consistently brings in the same rate of return. Either way, once you reach a certain point, your money needs to be extended beyond your current accounts.
No matter how old you are, it is never too early to start saving for retirement. Part of fixing your finances is looking into the future and planning ahead. By opening a retirement account, you can set aside money each week, each month, or a lump sum each year to get ready for life without a traditional income. Many accounts have tax benefits, so there are several different benefits to opening up an account and getting started.