Simple Keys to Personal Finance
Q. I want to improve my finances in the year ahead, but it seems like an overwhelming task. What guidelines or key rules should I follow in 2017 if I want to take control of my money?
A. The key to personal finance is not complicated. In fact, it’s simple, though it isn’t necessarily easy to follow. Simply put: you must spend less than you make.
No matter your income level, if you spend everything you make, you will never ahead. On the other hand, if you can learn to live on less than you earn and put the extra in savings, then you can get control of your finances.
Too often, people believe that if they can’t sock away a large sum of money each month, then it isn’t worth their time or energy to save anything. Believing this will keep you stuck. Saving any amount, no matter how small, absolutely makes a difference. Dollar by dollar, your savings will add up over time. As you watch your savings grow, you’ll feel empowered and will start looking for additional ways to build your savings account.
What’s more, you’ll be able to use your savings to get what you want, spending your money on what’s important to you. This can take vision, since it’s easy to get swept along with the crowd, chasing after what everyone else has. But the crowd doesn’t care about what’s important to you; you have to define this for yourself. It helps to have the end in mind when you start. What do you want most? Use your goals as a springboard to improve your finances.
While you’re building your savings account, you should also be thinking about how to improve your credit. Good credit will save you a significant amount of money over time, since it allows you to purchase the things you want at better rates. A person with good credit will pay less for the same item than a person with poor credit. Plus, good credit saves you money on insurance, utility deposits, and in some cases, determines whether or not you qualify for a job. To have good credit, you have to be able to pay your bills every month, on time, with full monthly payments, regardless of what is happening in your life.
In the meantime, you’ll meet life with all of its ups and downs. At some point, you may experience a setback, but you can recover. If you find yourself struggling, don’t ignore the problem, since issues with money tend to deteriorate when you fail to take action.
Instead, if you’re struggling, assess where you are. Then create an action plan to improve your situation. If you need help doing this, then I encourage you to seek help from a certified credit counselor. Under most circumstances, you can resolve your financial problems in as little as two years.
Start where you are. Define what you want. And then move toward your goals. Along the way, embrace the small successes, because like raindrops in an ocean, they all add up.
Bonnie Spain is the executive director of the American Center for Credit Education and Consumer Credit Counseling Service of the Black Hills. For more information, email firstname.lastname@example.org.
The material in this transmission is provided for personal, non-commercial, educational, and informational purposes only. ACCE makes no representations or warranties with respect to the accuracy or completeness of the contents of this transmission and assumes no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. You should consult a professional where appropriate.