If you struggle to effectively manage your money or lower your debt, give this approach a try.
We are all at different levels of the financial spectrum, and a good way to determine where to start with your plan is to be honest with yourself. Think about how you'd answer some questions like:
• Do you have enough money?
• Are you financially preparing for the future?
• Do you feel in control of your money?
• Do you pay off your credit card balances each month?
• Do you always save before you spend?
The following are the most important aspects of money management. Incorporating these basics into a money management plan will put you in control of your money instead of it being in control of you.
- Distinguish between wants and needs. Take care of your needs first, then satisfy your wants as funds are available.
- Set financial goals. Determine short, long-term and investment goals. Setting specific financial goals keeps you motivated to balance your spending plan.
- Make a spending plan. Determine your monthly income, expenses, debt payments and periodic expenses.
- Track your daily expenditures. Be aware of where your money is going. Use a tracking sheet to identify and plug up your spending leaks.
- Live within your means. Make sure expenses don't exceed income. Don't use credit to make up the difference between your income and expenses.
- Use credit wisely. Use credit for planned purchases and emergencies only (not impulse purchases). If possible, only charge what you can pay off every month. Track what you spend—when you pay interest, the cost of what you buy increases. Avoid paying only the minimum due. Don't charge more every month than you are repaying to your creditors. Credit payments should not exceed 20% of your net income. If you are in serious debt it may be wise to discontinue the use of credit.
- Build your savings. Set aside funds for periodic expenses such as car repairs, medical bills and taxes. Accumulate at least 3-6 months expenses in an emergency fund. If you are not in serious debt, save for short and long-term financial goals. Save at least 5%-10% of net income.
- Be current with your financial obligations. Maintain a good credit rating. If you are unable to meet your credit obligations contact your creditors immediately and explain the situation. Don't borrow from one creditor to meet another obligation.
You can find the full Downsizing your Debt plan at onenevada.balancepro.org under Resource Types, choose Booklets. This useful program includes a whole plan to help you, including pay off strategies, worksheets and budgeting tools.
And don't forget to take advantage of One Nevada's KeepTrack program which allows you to track all of your accounts in one place and gives you a full view of all of your finances. KeepTrack® can help you attain your financial goals by determining the best ways to budget and payoff debt. It's completely free and available through One Nevada online and mobile banking.