The Fundamentals for Getting Your Finances in Order

There are lots of fundamentals in financing that are often overlooked by people that are trying to make the most of their income. So many individuals fall into financial traps because they forget about the basics. They don’t need tons of books, videos, or seminar to become financially sound. There are lots of common sense tactics that can be put into play to give individuals control of their stream of income and their spending habits.

Pay Yourself First

This is a timeless concept that has been passed down for years. It’s been heard by everyone, but few people pay any attention to it. It may be overlooked because it is so simple, but it should be held in high regard because it works.

It’s easy to assume that it will be possible to save once every other bill is paid. The reality, however, is that most individuals will find something to consume any money that is not being used. Some people will unconsciously take on new bills without even considering saving. This is a bad decision.

People should always elect to pay themselves first. Anyone that is serious about their finances will find a way to put a couple of dollars into a savings account. It is important to save because there will always be unexpected expenses. People that do not have a rainy day fund will charge themselves into a financial nightmare with bills. Individuals that have the money that is needed for unexpected expenses will stay on track.

Stick To Your Budget

It’s important to make a budget, but it’s even more important to stick to it. Lots of planning can look great on paper. The tedious task of implementing it is where it really counts. There’s no need to have access to spreadsheets and templates that show debt to income ratios if they are not going to be utilized.

The purpose of the budget is to really help individuals allocate their money wisely. Some people may not know what they spend on entertainment, gas, or food. The budget helps people realize that they have a certain amount that can be spent on these things. When that amount is gone there is nothing left for these items. That is why it is also good to prioritize the items that are on a budget list.

Gas for work, for example, is much more important than entertainment. Food is essential, but the amount that is allocated for dining out may have to be curtailed to meet the budget. Some people simply may not be able to afford some of the things that are entailed in the list. The budget gives them an overview of what they have to spend. This saves lots of time and reduces unnecessary spending.

Balance Your Check Book

This is a traditional concept in financial management, but it comes with a greater responsibility today. Checks are still written, but today everyone has a debit card. These cards are often used more than check to make purchases.

The average person may use a debit card for miscellaneous purchase more than 5 times in the course of a day. This makes the balancing of the check book much more difficult. There was a time when checks were used to pay bills at the end of the month. Today people are able to pay bills online and utilize debit cards for big purchases like groceries and small convenient store purchases like drinks and chips. The will account for a plethora of debits during the course of a week.

It may be challenging to keep up with every dollar that is spent, but it is necessary. So many people obtain overdraft fees because they miscalculate the funds that are in the account. These individuals will find themselves with multiple overdraft fees because they did not factor in all of the debits during the course of the day. An oversight that puts a checking account in the negative by less than a $1 can cost $35. It’s always good to balance the checkbook to avoid these costly situations.

An even better way to monitor daily activity is through online bank monitoring. Individuals that have multiple bank accounts should definitely consider setting up online bank access. This gives you the ability to transfer money to accounts and setup overdraft protection. Online access allows you to monitor your activity because debits will show up as pending. This is a way to double check your calculations and make sure that the checkbook matches what is shown online.


Eliminate Credit Card Debt

It will be incredibly hard to take hold of your financial future with looming credit card debt. Resist the urge to only pay the minimum. Individuals that do this will find themselves with high interest cards that will never be paid in full.

Make every effort to pay as much as possible on the bills that have a large balance. Cards that have a small balance should be paid in full. This will eliminate any interest that is being paid on these small bills. It will also help consumers increase their credit scores.

Know Your Credit Score

Individuals that are serious about money management should take the time to find out what their credit score is as soon as possible. So much of what consumers purchase is based on their credit scores. It plays a significant role in something as big as a house and something as small as a cell phone. It influences how much a customer may have to pay on a certain item. Consumers that have high scores get better prices and lower interest rates. Individuals that have low credit scores should follow the steps above to improve their scores.

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