In 2012, the National Association of Personal Financial Advisors (NAPFA) published an infographic that revealed some startling statistics regarding the financial well-being of many Americans. They found that nearly 40% of adults in the U.S had no savings apart from their retirement funds. They also discovered that over 50% of adults fail to make a budget for their finances. With the Social Security surplus dwindling, it’s more important than ever for Americans to keep abreast of their finances and take steps to plan for the future. Bear in mind that your financial security affects not only yourself, but also the lives of your loved ones.
Evaluate the Current State of Your Finances
The first step toward attaining enduring financial security is to make a thorough, honest assessment of your current net worth. For those of us who have less than stellar financial track records, this can be a frightening undertaking. Do your best to leave your emotions at the door, and call in a professional advisor for assistance if you feel ill-equipped to evaluate your finances.
Make Budgeting a Habit
The easiest way to get yourself on a budget is to establish a reliable, repeatable methodology for tracking income and expenditures. Fortunately, there are plenty of tools available today that do most of the monitoring leg-work for you. Among these are a number of smartphone apps that can help you set goals, manage spending and track your financial status over time. Some of these are free, while others cost just a few dollars.
Add Savings to Your Expenses
Now that you’ve begun to establish a budget, it’s time to roll savings into your monthly expenditures. Determining how much you can save each month will require a special kind of awareness that typically develops with a bit of trial and error. For the first few months, it’s okay to make conservative estimates. If, after a while, you find that you’re winding up with more surplus income at the end of each month than you anticipated, consider increasing the amount you devote to savings. Treat your savings as you would a grocery bill; an unpleasant necessity that will ultimately nourish you in the future. At first this may feel like a significant blow to your monthly income, but with time you’ll adjust to your new spending habits.
Treat Debt Payments as Investments
Rather than thinking of debt payments in terms of the money you’ll lose now, think of them in terms of the money you stand to save later on. The troubling thing about debt is that it doesn’t stop growing until we start making payments. By paying them off as soon as possible, you’ll free up more money to make more lucrative investments in the future.
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Debra Mace is passionate about helping her community through volunteer activities. With these blog posts, she hopes to engage interested readers with ways to better their current financial situation. Debra works throughout the Shenandoah Valley providing sound financial solutions for individuals and families that struggle with getting their finances in order.