As we move into the New Year, our national economy is in shambles. It is more important now than ever before to protect your finances as well as your identity. So to get you started off right, here are some tips and ideas to get your financial stuff in order.
1. Understand the difference between wants and needs. Being financially stable depends on you being a responsible spender. For example, paying your mortgage is a need, buy new clothes is a want. Being frugal is pertinent. Cut out coupons from the newspaper and pay attention to sales on things that you frequently need.
2. Have a cash stash that is equal to approximately 6 months of living expenses. Average out your utilities, food and other expenses and save some for a rainy day. Put a little back each payday in an account that you cannot touch or dig into. This is your emergency fund and shouldnt be touched unless it is absolutely necessary. If you DO dig into the fund, that money needs to be replaced as soon as possible.
3. Pay off all of your DEBT. Begin paying off your debt by starting with the highest interest bearing debt like credit cards and personal loans. Sometime the interest rates on these can be as high as 39%. Do this before you begin saving. It will help to save you money in the long run and is one of the most important steps to gaining financial independence.
4. Protect your Identity. Identity theft has become the crime of choice in recent years. It costs victims on estimated 6 billion dollars a year to pay for identity theft. You can protect your money and your identity with a service like Life Lock. Life Lock is a service that guarantees protection of your credit backed by $1,000,000 to you if they don't. They help to reduce the amount of credit card offers you receive and pro-actively monitor your credit.
5. To keep you from dipping into your savings unnecessarily, put extra money into CDs, money market accounts, or other securities that are harder to access. That way, you won't be tempted to spend all that hard saved money.
6. Write out a budget and stick to it no matter what. This is so super easy to do. Label several jars with categories like "eating out", "movie night", or "entertainment". Every payday, put $40 in each jar. That will be your allowance for that particular category. When the jar runs out, you have to wait until the next pay day to replace the money and your budget for that item. This sounds tough, but it can really be of benefit to your finances.
The status of the current economy is awful, but that isn't a secret. Therefore, we must look for ways to protect ourselves and our financial situation so that we don't need the kind of financial assistance that some of the big companies have needed. Don't let any of that nonsense happen to you this year. Keep a budget, look for deals, and spend smart!
If you are careful with your money, you won't need a bailout. Maybe, you will one day be teaching CEOs how to run the finances of a company!
Author Resource:
Linda Seamore is an expert on the subject of personal finance and has written numerous articles on it and on credit protection services like LifeLock . She suggests researching all credit protection services like www.lifelock.com before signing up.
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