Paying Existing Bills Hassle Free
Money is too important not to treat it with respect. Businesses have a budget and cash flow which they monitor on a regular basis to see how they are doing. The information is crucial for decision makers in the business. Such information is equally valid for individuals so that they manage their affairs properly, paying existing bills but also providing for the future. A budget requires self-discipline and should be comprehensive, providing indicators of how things are going and what changes may have to be made.
If you haven't got a personal budget you should prepare one, even if you don't appear to have any current financial problems. It is a way of setting yourself goals and achieving them. Those goals could be anything from saving a deposit to buy real estate to creating an emergency fund or increasing provisions for retirement. It will give you an added incentive to follow your budget.
Your goals must be achievable of course. Whether it is realistic to pay off all your debts in a short time scale may be debatable but there is little doubt that if you have a regular income then you will be able to pay off your most expensive debt, often that on your credit cards which incur a very high rate of interest each month. A simple $5000 no credit & low interest cash can be used to pay those balances. You then need to ensure that you only buy what you can afford to pay for in full at the end of the month when the statement comes in.
So what are your goals?
- Specific aims for a start; a commitment to yourself to manage your money better and that means reducing and paying off 'expensive debt' in full.
- Only things that are important. You should determine the priorities and work towards achieving them.
- And of course they need to be just that, achievable. If you set your targets too high you can get discouraged if you are obviously failing.
Goals will fall into two categories, short term such as paying off that credit card debt and longer term which typically may be saving for a comfortable retirement.
Break Down Your Pay Check
You should think about how much you earn and whether there is a way to break down your spending habits and saving needs into target figures within that income. There will always be a percentage you will need to pay off your bills though there is no harm in looking at whether you can reduce those bills further by looking at your utility, telephone and insurance costs. You should ensure that you can save a further percentage and ideally have that figure moved out of your checking account as soon as your pay check arrives each month; away from temptation.
Your scope to prepare for retirement has one obvious limit; time. In your 20s retirement seems so far away yet if you begin to put something away each month as soon as you begin your career then a combination of time and compound interest will help it grow. If you don't start until your mid 40s the time element is halved and therefore the amount you will need to put away to create a similar fund grows enormously; it is not just double.
A 401k is a popular way to provide for retirement because your employer is able to contribute up to an agreed level. There are tax advantages as well but all the risks are yours. Growth is dependent on your expertise and can be harmed by such things as recession which of course hit everyone's investments recently. The point is there are no guarantees but the 401k remains the most popular way to provide for retirement.
In an ideal world you should save 10% of your income from the beginning and perhaps aim to be up to 15% by middle age. That will certainly be a means of proving for the time when your regular pay checks stop. People are living longer and you want to be one of them.
No budget is effective unless you monitor how things are going and you adapt to changes that have taken place. If those changes have worsened your position you will have extra work to do to get back on track. It may be you are overspending because you have missed out all the small pieces of daily expenditure that you face. Perhaps your coffee shop visits, a few dollars here and there are missing.
If you are not particularly good at putting figures together you need to get help in the preparation of your budget. That is easy enough to so, even if it is in a simple spreadsheet form. You may begin by making estimates but as soon as possible you need to replace those estimates with actuals. You should soon get into the habit of working with your budget and as a result you will begin to understand money management more. The exercise will certainly be worth the effort.Read more Comments