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Free Tips to Save Money and Prepare for Expenses
Even if you're single, prepare for the day when you'll have a spouse and children. Don't be taken by surprise and to have the security of your personal finances threatened. Read our free top tips on how to save money and to prepare for unexpected expenses.
Set Financial Goals - Build your financial goals list. Putting your goals down on paper and making a mutual agreement has more impact than simply talking about them.
Save for Rainy Days - You'll have rainy days, and you'll be glad to have a financial umbrella. Get your long term financial investments such as IRAs underway. Not only will you have money set aside for the future, you'll also earn additional interest money. If you save; for example, $200 per month for just 10 years at 10% compound interest, you'll earn over $40,000.
Budget in Reverse - A budget is a prime tool for getting finances in order, but many people fail to stick to it. One strategy is a reverse budget. If your goal; for example, is to save $200 a month, make it automatic by having your employer; or bank, automatically transferring $50 per week to a money market account.
Live Credit Card Statement - Instead of relying upon your credit card issuer to keep track of your card purchases, keep your own live record. As you know, some credit card purchases may not show up on your statement (nor even your live, online account manager) for several days. By keeping your own live, paper record of credit card purchases, you can avoid overspending and/or overlimit fees. Also, by keeping your own current grand total, maybe the sum will deter you from making unnecessary purchases. When your credit card statement from your issuer arrives, double check that all of your charges mirror your own record. This will help you identify any fraud.
Pay Off Bills in Advance - Make a list of all of your recurring fixed monthly bills (auto loan, mortgage/rent, utilities, cable, etc) and; at the start of the month, write out a check to pay each one. Don't mail the checks until they're due, but go ahead and deduct them from your balance. This will give you a clear idea of how much money you have left to save and spend.
Plan for Impulse Purchases - All too easily we forget to budget for impulse purchases, such as buying a recipe book at the grocery store checkout. Each month, conduct a financial review with your spouse and include last month's expenses. Also prepare for non-routine expenses like quarterly insurance payments. This way, you not only correct past waste but you'll also reduce the possibility of unexpected expenses that might jeopardize your budget.
Payoff Worse Debts First - If you come into a chunk of money such as an inheritance or employee bonus, payoff worse debts first. We recommend first paying off credit cards, then investments and school loans. The reason school loans come last is that they usually have a decent interest rate, provide tax benefits, and aren't held against you on your credit report (unlike credit card debt).
Don't Over-Fund Funds - Don't buy too many mutual funds. Since they are already diversified you risk overlapping investments. Hence if a repeated stock tanks, it effects more than just one basket of money. Use morningstar.com to see if any of your funds cover common ground.
Review Class Rules - When buying stock, be wary of share classes. Many young couples are sold B class stocks but are unaware that if they try to sell it within seven years, they'll be charged a fee in addition to the annual fee. Also that means money is locked away for a long time. Instead, consider a C class share. Although the annual fee is 1%, it's worth it if you want your money within seven years.
Invest International - Make sure your investments include foreign equities. If you buy world funds, they're generally consisted of 60% domestic and 40% foreign. You might be in position for an overlap. An international fund has a higher percentage of foreign investments which can potentially fare better than the ones at home... consider the many upwardly mobile economies all over the world.
Prep for Retirement - Put something toward your 401k even if you're in debt or struggling to save money. If your employer has a match program, try to add the entire amount.
Secure Insurance - Health insurance is a must. Review the plans offered by your employer and that of your spouse to choose the one with the best benefits and lowest costs. It may be best if you both were in one plan together. Don't be put off by a high copay, because it might mean a lower monthly premium.
Build a Baby Budget - Your personal finance plans should include the expected costs of expecting; and then raising, a child (or children). If you don't have a clue, ask friends and family members what they spent to birth and raise children.
Children and College Costs - If you want to get a small start on education, opt for a 529 plan, which can be opened in your name and changed when your child is born. Basically it's a tax-advantaged savings plan designed especially for college tuition and expenses. Here's a beneficial twist: Have grandma and grandpa open the fund and, instead of buying Junior toys he'll play with once, they can put the money toward a university he'll attend for four years.
Calculate interest savings you can earn with a savings account.
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