Keeping finances in order is one of the biggest stresses that many people go through. Financial challenges can be difficult and stressful, so it is a good idea to get your finances in order now before you go on a holiday spending spree.
While everyone has different challenges and issues when it comes to finances, here are 5 basic strategies to employ so you can master your money.
1. Set specific goals
This one is probably the most basic, but will give you a clear direction of what exactly you need to do. There are numerous ways to set goals, but one common way is to set what are known as SMART goals – Specific, Measurable, Achievable, Realistic, and Time-bound. Whatever your financial goals may be, following this criteria will allow you to accomplish meaningful and impactful goals.
2. Pay off your credit card debt
One of the fastest ways to improve your credit score is to pay off or pay down your credit card debt. High credit card debt typically negatively impacts your credit score more often than other loans such as a car loan, student loan, or mortgage loan. By making paying off credit card debt a priority, you will have more financial freedom when wanting to make other purchases down the road.
3. Maintain an emergency fund
Recessions and other personal hardships are difficult to predict. Having 3-6 months’ worth of expenses set aside for these situations will help your family through these hard times. Although it might be difficult to save this amount of money right away, setting aside a fixed amount of money each pay check will add up to help get you to the 3-6 month threshold.
4. Buy a home
Although a large expense, buying a home is typically the best investment that many people make in their lifetime. With diligent research and buying a home within your means, most homes will appreciate and increase in value if they are taken care of. Buying a home now can pay big dividends when it is eventually sold.
5. Eliminate impulse purchases
Most of us have been prone to an emotional purchase at one time or another. Having impulse purchases become a reoccurring theme, however, can put you in a world of financial hurt. One way to counteract this is to make a list before going shopping. It is a simple way to think things out beforehand and to hold yourself accountable when you are in the moment.
While there are numerous ways to increase your financial security, these are 5 main ones that are well tested and have proven valuable over time.
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