Make more money: Indeed, it may sound
simpler than it really is, but it's by no means outside the realm of reason.
Just take a look at what you're making now and try to find ways to augment
it, be it asking for a raise, working extra hours, holiday or overtime,
taking on a part-time second job, applying for a promotion or for a whole
new job with an entirely different employer - there are numerous ways to
increase your earning power.
Pay yourself first: This is an ages old lesson that is as tried and
true as they come - the instant you receive each paycheck, take 10% and sock
it away in savings. Plan to live off of 90% of your income and you'll be
slowly but surely building a sizable nest egg that could end up lasting you
a lifetime. But if you don't do this religiously, first and foremost upon
being paid, then there will be no money at month's end to save at all, not
10%, not 1%.
Pay your credits cards off: Credit card debt is a brutal,
self-feeding cycle that can decimate your savings faster and more
effectively than almost any other financial burden. At the very least, make
your minimum payments on time so that your credit report remains untainted.
Good credit is priceless in today's world. And in many important
circumstances, excellent credit can even compensate for poor income and
savings. The best course of action, however, is to carry no balance. Pay
your credit cards off in full as soon as you possibly can. Then restrain
yourself from using your credit cards except when you know you can pay off
new purchases in full at your very next billing period.
Make your 401K contributions: Especially if your employer makes
matching contributions, take maximum advantage of any 401K plan you have
available to you. Not doing so would cheat you at the very least of the
income from those matching funds, not to mention the income that can be
gained from savings account interest or investment maturity. You wouldn't
turn down a company bonus would you? Then don't let your company's 401K plan
go to waste.
Stay on top of your investments: As time passes, the economy
fluctuates, and an intelligent investment today may be a foolish investment
tomorrow. You need to review your portfolio regularly and readjust it
regularly to avoid loss and pursue gain. Remember, though, avoiding loss -
or protecting your capital - is infinitely more important than pursuing
gain. Don't let any one stock comprise more than 5% of your total portfolio,
and don't let any one industry comprise more than 20%. Remain diversified
and readjust your distribution of assets as the performance of your holdings
changes. Seek professional financial guidance as necessary.
Build an emergency fund: Start saving money in a separate,
FDIC-insured account and build it up until it contains enough to cover six
months of your expenses. Take a look at your total expenses (both variable
and fixed) from your personally designed or Budget Forecaster household
budget and then multiply it by six to discover how much you should keep in
an emergency fund. Then leave that money alone until and unless you need it.
Should the unfortunate day come that you do, you'll be glad it's there.
Get your free credit reports: Your credit reports can be among your
greatest tools for acquiring credit or they can be your biggest hurdle. The
government decision to allow consumers a free copy per year of each of their
credit reports from the three major reporting bureaus - Experian, Equifax,
and TransUnion - is an opportunity to take charge of your finances that
should not be ignored. See our companion article entitled "Get a Free Copy
of Your Credit Reports" for further details.
Review and update your insurance policies: As with bank terms and
credit card rates, insurance premiums also change considerably over time. A
good deal yesterday could be a lousy deal today. And with your ability to go
online, you can easily compare and contrast insurance offers in an instant.
Important coverage to make sure that you have on both your home and auto
insurance plans is cost replacement insurance. Decent liability coverage is
also of the utmost importance. And also be certain that the insurance on
your home accurately reflects the true value of your home today.
Start A Business: Starting a business is easier today than ever
before. There is all sorts of informational material, resources, and tools
available to help you, and most of them are free. Whether it's selling books
on eBay, developing a sleek new high-tech product from scratch, or
outsourcing your intellectual talents there is a market out there for almost
anything. Whether you decide to go into business full time or part time,
there is money to be made that will ultimately help you to keep your
finances under control by increasing your income.
Kenneth C. Kelly is the
President of Strativia, a financial management software development and
services company specializing in applications for personal and business use.
Strativia is the developer of Budget Forecaster, a sophisticated home budget
and personal finance management software package.
Website: http://www.strativia.com
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