There are many ways to measure financial health. Debt load, personal income level, property equity, cash on hand, and countless other metrics provide clues, but no single measurement tells the whole story. Similarly, there is no single solution available, capable of fixing all your financial woes. Instead, consistent financial success relies on a number of proven practices, from monthly budgeting to long-term investing. Among the many useful approaches, try these three habits to further your financial goals and increase your economic security.
Make Saving a Priority
In addition to daily monetary concerns, successful personal financial management accommodates future needs, by carving out cash for savings and investments. Unfortunately, many people are lagging, failing to set aside enough personal savings. If this sounds familiar, turning your focus toward this important piece of your financial puzzle is straightforward way to strengthen your overall financial health. Try these proven tactics to boost savings:
- Try automatic withdrawal – A common philosophy shared by many successful personal financial managers is to pay themselves first. Rather than pay the bills and live on whatever is left, proponents of the strategy reverse the equation, taking the house cut first, before spreading what’s left among creditors. Automatic withdrawal yields similar results, helping you save more by ensuring a savings contribution is made, before you divide the remaining spoils. To take the process out of your hands, set-up automated paycheck deductions, steering the money to a separate savings account you won’t be tempted to raid.
- Maximize employer contributions – Each employer extends its own suite of benefits, commonly including investment and savings plans. You may have choices administering your work-related savings benefits, so make sure you are taking full advantage of employer sponsored contributions. If a matching offer is available, for instance, select the maximum contribution level, so your savings grow at the fastest possible rate.
- Use budgeting tools – The first step to setting-aside money is finding funds outside your personal operating costs. Budgeting tools help trim spending, so you can build savings. Apps are widespread, but an old fashioned pen and pad are a good start, tracking spending and reconciling each month’s income and cash flow. The idea is to cover all your living expenses, with enough money reserved to fund a budget category earmarked for personal savings.
Stretch Your Household Income
The further you stretch household resources, the more income you’ll have available to cover spending and plan for your financial future. Although each person’s financial prospects are unique, several universal practices support healthy cash flow, helping families make the most of their take-home pay – regardless of income level.
- Commit to savvy shopping – When and where you buy consumer goods has a significant impact on your financial bottom line. Shopping off-season, for instance, lands the best deals on clothing and cyclical merchandise. Similarly, the best sale prices are found during after-the-holiday clearance sales and other events following major selling seasons.
- Correct credit conditions – Borrowing decisions follow you through life, so it isn’t unusual to occasionally lose sight off what you’re paying for credit privileges. Taking a close look at your outstanding debt helps shine a light on the true cost of interest and finance charges. Depending upon your circumstances, it may be possible to secure better loan terms, wiping-out costly recurring charges. Consider the high rate paid for revolving credit. What if you could consolidate those double-digit interest payments into a more affordable personal loan? Under the right conditions, you may be able to do just that. To land the best terms, use online comparisons to highlight your financing options and open doors to capable lenders.
- Take advantage of promotions and incentives – Sellers and service providers operate under competitive conditions, so they commonly offer deals and special pricing to lure customers and stimulate repeat business. You can use these economic realities to stretch your household income, using promotions to trim spending in every budget category. Clipping coupons at the supermarket, signing-up for customer loyalty programs and doing business with vendors offering discounts are easy ways to squeeze extra buying power from your budget.
Maintaining sound financial health is a lifelong pursuit, sometimes calling-for creative money management solutions. Committing to these six strategies helps maximize income and savings, reinforcing your financial security.