As expensive as they are to raise, few things are as life-affirming as watching your child grow. Prioritizing personal finance before starting your family will help you establish good habits and help to ensure baby’s future is bright.
If you need help with your finances but aren't sure where to start, seek financial wisdom from books written by experts. To boost your savings, buy used financial books online or borrow them for free at your local library.
Start by writing down your income and all your expenses, and then subtract the expenses from the income to determine your discretionary spending. At the start of each month, set up a budget to allocate how discretionary funds get spent. Track your spending over the course of the month, and at the end of the month, determine whether you stuck to the budget. If you spent more than you made, fix your budget by cutting unnecessary expenses. Implement the revised budget the next month and start living within your means.
While you may not be able to reduce fixed expenses such as rent or a car payment without drastically altering your lifestyle, you can reduce variable expenses, such as clothing or entertainment, by being frugal. You can, for example, reduce electricity consumption to lower your utility costs, choose different providers for your home or life insurance, or buy food at a discount at bulk stores.
There's likely one bill you could cut today and save hundreds of dollars every month: your cable bill. Of course, you don't have to give up TV altogether. Canceling cable in exchange for low-cost streaming services such as Netflix and Hulu allow you to watch the shows you love for a fraction of the cost.
The occasional splurge at a nice restaurant is fine, but the savings can add up if you start cooking at home or bringing bagged lunches to work instead of eating out each day. In fact, by bringing your own coffee, breakfast, lunch, snacks, and beverages every day, you can save anywhere from $2,000 to $4,200 or more over the span of a year.
One of the most expensive mistakes you can make is to carry a lot of debt, especially high-interest credit card debt. If you want to change your financial picture, pay off your debt as quickly as possible. Start by listing your current debts and figure out the minimum amount owed to remain current. Paying the minimum amount, however, won't get you out of debt quickly. So, evaluate your fixed expenses and determine how much of your discretionary spending budget you can allocate toward debt repayment. You may be able to reduce the interest rate on the debt by asking the issuer for a lower rate, consolidating your debts, or transferring high-interest debt to a low-interest credit card. Then, create a debt payment plan and pay off the debt as quickly as possible.
If you are struggling to make ends meet, you may be relying too much on your credit cards. If you keep using credit cards as a stop-gap measure to make ends meet, you'll quickly wind up in debt. This will limit how much money you have each month to pay bills, save for retirement, or work toward another financial goal. Put the credit cards away.
Your student loans can saddle you with debt for years if you are not proactive. Whether you need to refinance or consolidate, see if you qualify for a student loan forgiveness program, or add them to your debt payment plan, getting control of your student loans is an excellent strategy to improve your finances.
Another way to curb your spending and get your finances in order is to go on a spending fast. In other words, stop spending money for a set period of time. Often, these are month-long periods of curtailed spending that make exceptions only for essentials such as food, transportation, and recurring bills.
Financial issues can stem from insufficient income as opposed to spending issues. If you’re sticking to a budget and not spending money on things you don't need, but still have issues making ends meet, you may need to look for a higher-paying job or generate more than one source of income. If you can't get or change your job, look for opportunities to generate income on the side.
Ask if your company offers additional employee benefits such as dental and vision insurance and flexible spending accounts. Not all of these benefits may be worth the additional money that you pay for them, but some can help your finances by relieving you of the need to pay out of pocket for essential expenses. Take time to evaluate your options so you get the most from your employee benefits.
Let MNSAVES 529 help you meet the challenge of affording college when the time comes. These strategies are a few first steps—opening a 529 account can help too.