If you feel as though you’re not doing enough to save and plan for the future, you’re probably right that you could be doing more. It’s surprisingly common for people to let years elapse before making any life changes that will affect their financial status. In many cases, people simply aren’t able to exercise forward thinking because their expenses are continually in excess of what they earn. The cost of living continues to rise, yet wages remain fairly static. Nevertheless, even when people aren’t earning enough to pay for basic necessities, they often put money towards less important expenditures. Also, they don’t look for savings where they can or make an active effort to achieve better financial health. They simply accept that money is tight and they give up on trying to effect change.
Despite the difficulty of making changes or the realities of having to go without the things that you want, there’s a lot that you can do to take charge of your finances. Small steps towards being more attentive to spending and saving will ultimately give you better control of your financial future.
1. Preserve Your Credit
Even if you’re not planning on buying a home or taking out a loan, your credit score can be a huge factor in your overall financial health. When you apply for a new higher paying job, a poor credit score may be a red flag to a hiring manager. If you want to move into a more affordable apartment, poor credit may make you an unappealing tenant. Furthermore, your credit score can subject you to higher interest rates on monthly expenses such as your credit cards or car payments. Make it a point to check your credit regularly so you can stay on top of any reporting mistakes. Pay your bills on time, and avoid letting outstanding account balances fall into collections.
2. Plan Ahead
Even when you have a lot of outstanding expenses, you still need to think about savings. Having some money put away is extremely important to your financial security. You need two different types of savings accounts. First, you need a rainy day fund that can go towards emergency expenses or help you withstand a sudden loss of income. Second, you need to save as a part of your retirement planning. Although retirement may still be many years away, your efforts to plan for it now will have a considerable impact on when you can retire and how comfortably you can live when you do. Determine what percentage of your income you can set aside each month for both accounts, and don’t deviate from your savings plan.
3. Avoid Frivolous Spending
It’s okay to get yourself some of the things that you want, but you simply can’t buy everything that you want. Put some reasonable limits on unnecessary expenditures. In particular, it’s essential that you don’t spend more for things than you really need to. Avoid paying full price for items that you can purchase at a discount by shopping around or waiting for a sale.