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~ by Richard Sgaglio
Many people struggle with finances because they are not prepared for the future. The good news is that there are steps you can take to help correct this. October is National Financial Planning Month, and it's the perfect time to review your finances and take action that can lead to better financial success. These six steps may help you improve your finances.
Take a look at your credit card and bank statements and tally up your spending. You may find that you're overspending in some budget categories, and adjusting your spending can free up money for debt payoff or savings goals.
It's also a smart idea to take some time to create a budget. Setting and following a budget can help you avoid overspending each month. Budgeting doesn't have to be a struggle and even beginners can successfully set a budget.
You may be paying for unnecessary bills or expenses. Perhaps you're paying for a product or service that you're not using, or maybe you buy lunch every day but could instead pack some food most days and treat yourself to takeout once a week. As you examine your spending habits, see if you can find areas to cut back. Even small changes can add up over time.
Fees add up, and they eat into your hard-earned money -- whether it's bank service fees, ATM fees, overdraft fees, or late fees. Now is the time to see if you can reduce or even eliminate them.
Here are some ways you might be able to cut down on these pesky fees:
Taking advantage of banking and bill pay options that don't hit you with frequent charges can allow you to wave goodbye to these silly fees for good. And that could free up a little more of your hard-earned cash.
If you have a lot of debt, it may feel impossible to get ahead financially. The longer debt accumulates, the bigger it will get, and interest charges can add up fast. If you're in debt, we recommend prioritizing debt payoff. If you're unsure where to begin, this guide outlines how to pay off debt and the best steps to take.
Many households have no emergency fund. If you don't have emergency savings, going through a challenging life situation can be even more stressful. You may have to use a credit card to pay for unexpected expenses, which could result in more debt.
Try to start an emergency fund and contribute a bit each month. Even a few dollars can help get you started. For example, setting aside $25 per week will add up over time. That's $1,300 saved after a year. Maybe you can afford a little less or a little more. Either way, it will accumulate.
It's also a good idea to open a separate savings account to keep your emergency money so you're less likely to touch it, and so you know exactly what those funds are for.
Setting up automatic savings is also a good bet. When you automate savings there is no forgetting, and it's harder to make excuses. You can automate an amount you choose to come out of your bank account each week or month and go right into your savings account.
Whether you have rental, vehicle, or home insurance policies, review them often. You may need to make adjustments to your coverage if you've experienced life changes -- and to make sure you're not overpaying.
Take a good look at your insurance deductibles, too. The deductible is the amount the policyholder pays before insurance kicks in. Depending on your financial situation, it may make sense to lower or raise your deductible amount. Having the right coverage can help policyholders avoid financial stress when it comes time to file a claim.
Also compare rates and make sure you're paying a fair rate for your policies. Not all insurance companies price their policies the same way, and average insurance rates can change over time. So it’s a good idea to shop around each year before your policy renewal is due. You may be able to save money.
As the weather begins to get cooler and fall sets in, consider celebrating National Financial Planning Month by reassessing your finances. Taking the time to make a few small changes now may improve your finances over time -- and that's a good thing for you and your wallet.
Want to learn more? Please check out these free resources from Credit.org.
The information in the above blog post is not intended to be a substitute for professional financial advice. Please speak with your financial, tax or legal advisor before making any financial decisions.