Tips For Managing Finances In Today's Economy
Keeping an eye on your money is important in any economic situation, but it becomes even more important when money is tight. Changing the way you manage your finances in this economy is an often overlooked way to stretch your dollars and be prepared for the challenges that may arise.
Tips for Financial Management in a Slow Economy
An experienced professional will be able to offer advice and recommendations tailored to your specific needs, but there are some guidelines that can help everyone more effectively manage their finances, including the following.
Develop a realistic budget. Knowing where you spend your money will help you identify areas of waste, but an idealistic budget will only set you up for failure. Track your expenses and set a budget based on your spending history that includes savings and an emergency fund; then stick to your budget.
Don't stop saving. In a slower economy, many people see lower commissions or less overtime, resulting in less money coming into their house. If this is the case in your home, don't let that be an excuse to stop saving. Aim for ten percent of your after-tax income and be sure to set that money aside as soon as you are paid so that it doesn't get lost on non-essentials.
Be prepared for emergencies. Most people know that they should be saving for retirement, but what about a car accident? Losing your job? An illness? Having money set aside for these types of emergencies will keep your retirement savings safe while you miss work, look for a new job, or get healthy after being sick.
Put away your credit cards. Another symptom of decreased income is increased spending on credit cards, and this is a dangerous habit. It is especially important when money is tight to use cash or debit rather than credit cards so that you can keep an eye on your budget and avoid excessive debt.
Adjust your investments. Markets change and your needs change as you get older; in every economy it is important to review your investments with a professional who can help you decide on appropriate risk levels for your age group and needs. Expereinced financial professionals know market trends and will help you take advantage of market downturns.
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