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How to follow the financial advice your hear

Helpful financial advice can be found everywhere. The key is understanding and taking action on the tips we hear so often. Understanding how you live within your means or what it takes to save early and often for retirement is not always as easy as it seems. The way in which you follow the advice is key to developing a solid financial future.
The most common financial tip is live within your means.
This sounds simple but actually it can be one of the most difficult to follow. We all have the means to acquire debt, if we run up that debt, our financial situation is going to quickly deteriorate. To follow this advice, build a budget and make sure your cash flow works - that is what this really means.
What about save for retirement early and often?
Early means from day one and from every paycheck. This starts with the first day of your first job, if offered, open a 401k account or start saving in an IRA at least 1% of your income. Don’t wait until tax time to make the contribution because often times we don’t make it.
How do we make sure we are not house poor?
This starts with have a solid budget in place before buying a new house and also making sure that all costs of owning a house are considered in the costs of homeownership.  If you can keep all of your housing costs to less than 20% of your monthly net pay, you will almost always avoid being house poor.
What is the best way to not spend more than we earn?
This can be really easy.  After setting aside the money to pay all of your bills, put the rest in a checking account and only use your debit card or cash to make purchases. When you run out of money, you have to stop making purchases until your next paycheck. The key is paying all of your bills first and never using a credit card for everyday living expenses.
We have all heard about building your credit score but what is the best way to do this?
This doesn’t have to be difficult, but it can take some time. First and foremost, always pay all of your accounts one time.  Secondly, keep your outstanding balance to credit limit ratio to around 50%.  And finally don’t open every store charge that is offered.  These three actions are the top three ways to improve or build your credit score.
How do we take advantage of free money?
This is almost always referencing three distinct actions. The first is making sure that you contribute to your 401k at the level to receive all your company’s match. The second is using loyalty shopping cards to automatically receive discounts.  Finally, if you use a credit card, make sure it is a rewards card so that all of your purchase activity earns you some type of reward.
How should we go about building an emergency fund?
This can be one of the most difficult pieces of financial advice to follow. One great way of building an emergency fund is to have those funds deducted from you paycheck and deposited into a separate savings account. To increase what you are saving, start using a grocery loyalty card and after every shopping trip, whatever you saved, transfer those funds to your emergency fund right away. These two methods can help you quickly build a nice emergency fund.

Posted: 10/19/2016 with 0 comments

Categories: Budgeting, Financial, Homeownership, Money Matters, Retirement, Spending

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