habit to pay bills after their due dates? Do you make only the minimum payment required (or even less!) on your credit card accounts?
Or, are you, like 60% of Americans, living paycheck to paycheck?
If you answered yes to one or more of the questions above, take that as a sign you lack financial preparedness. And now’s the best time to get your finances back on track.
WeAre you constantly feeling stressed or anxious about the state of your finances? Has it become your ‘ve shared our financial planning checklist and tips in this guide, so read on.
Create a Budget
A budget allows you to track your cash inflow (e.g., salary or profits) and compare it with your cash outflow (expenses, loan payments, etc.). With this, you can have a more accurate picture of where your money goes. It also helps pinpoint issues that may be behind your poor financial health.
For instance, you may discover that you spend too much on luxuries or non-essentials.
A good example is if you often eat out. If you don’t have a budget, you may not notice that you spend thousands of dollars on restaurants, takeaways, and deliveries.
So, you know, the average American spent $3,639 on food away from home in 2022.
You can cut off a good chunk of that expenditure by cooking at home instead. You can then set aside what you’ve saved and put it in an emergency fund.
Set up an Emergency Fund
A survey found that nearly half of Americans have little to no emergency savings. Over one in five have no savings at all.
If you’re in the same boat, it’s time to set aside some of your income for emergencies or unexpected expenses. Otherwise, you might get forced to take on high-cost, even predatory loans.
With an emergency fund, you can sleep better at night, knowing you have enough money to help you deal with emergencies or sudden expenses.
You should aim to save up for at least three to six months’ worth of your necessary living expenses. These include rent or mortgage, food costs, transportation, and utilities, to name a few.
It’s also a good idea to automate the transfer of your emergency savings to your savings account. This way, the money automatically gets transferred on the same day every month (for example, the day you get paid at work).
Implement a Tax Strategy
You can reduce your tax-related expenses by understanding tax filing for married couples. For instance, filing your taxes separately from your spouse can lower your tax rates.
You may also be eligible for other tax credits or incentives. For example, you can contribute to an individual retirement account (IRA). Another is by making charitable contributions, which can reduce your tax bill.
Follow These Financial Preparedness Tips
Proper budgeting, tax strategies, and emergency savings are all crucial financial preparedness tactics that can help your finances become more stable. They can help you survive unexpected expenses that may force you into debt.
So, starting today, follow the checklist and strategies we’ve shared above.
Check out our other helpful guides for more practical lifestyle and financial tips like this!
