When it comes to financial matters — such as getting pre-approved for a mortgage or clearing up bad credit — it can be easy to feel lost. Rarely is financial advice clear-cut; instead you’re left scratching your head at unfamiliar topics and looking for advice that actually makes sense. We spoke with Jeff Rose, certified financial planner from Good Financial Cents, who took three of the most common financial tips and broke them down for us. Here are his thoughts on how you can take quick, easy action to benefit your financial future.
We’ve all heard it: “Why don’t you just spend less?” This advice is usually a lot easier said than done — especially when seemingly everyone is enjoying that expensive morning latte.
Luckily, you don’t have to give up your java fix to start following a sound financial plan. Spending less could mean “simply learning to live on a budget so you’re being more intentional about how you spend your income,” Rose told us. One easy way to start being more intentional about your spending is to use apps or online services to track your finances.
Beyond using mobile apps, you can make small adjustments to your daily routine to save more money, such as opting for ride-sharing services like uberPOOL or Lyft Line, or taking public transit home from the Friday evening happy hour. And swapping your gym membership for at-home exercises — either on your own or via fitness tutorials on YouTube — allows you to spend less while working out.
When it comes to managing your finances, Rose recommends making high-interest debt a priority and paying it off as quickly as possible. “Almost nothing holds you back from achieving your financial goals as much as high-interest, unsecured debt like credit card debt.” The bottom line? You can start making progress toward your savings goals when you assign a purpose to every dollar.
Set Savings Goals
You can achieve something more easily when you have a specific goal in mind. But what kind of financial goal will help you be the most successful? Well, it depends on the individual.
“If someone isn’t saving enough, they might create a goal to increase their savings by a few thousand dollars this year,” Rose told us. “Perhaps they could break that amount up into a monthly goal as well. For example, a family who wants to save an extra $6,000 this year should strive to find a way to cut $500 per month from their existing budget.” While there are many ways to cut your budget, he recommends starting with your car.
“Since the average car payment is around $499 per month, you can save around $6,000 per year by keeping your old, paid-off car a few years longer,” Rose pointed out.
If you aren’t currently the owner of a paid-off vehicle, however, there are other ways to save big. Why not forego a traditional (and expensive) vacation and book a home on Airbnb? Or maybe you can plan a staycation instead? According to Allianz Travel Insurance, the average American household is estimated to spend $1,798 on a summer vacation, so opting for these nontraditional trips can get you even closer to your savings goals. If $500 seems like a lot to try to save each month, Rose suggests you avoid “dining out as often and start cooking meals at home. Cut the cord to cable television, and use streaming services like Hulu, Sling TV, or Netflix instead.” By cutting out smaller splurges, you can set up a realistic plan for yourself that will help you achieve your savings goals.
Document Your Spending
Whether you document your finances using spreadsheets or charts, Rose recommends “checking in with your goals every few weeks or once per month at the very least. [Doing so] is the best way to make sure you don’t fall back into old habits.” He also suggests pinpointing areas where you may be spending more money than you intended.
“Perhaps you’re spending a ton of cash at the grocery store … or spending a lot more money on your hobbies than you ever realized. A lot of times, people don’t realize the little ways they’re spending money that add up over time,” Rose pointed out. “Once you start tracking your spending, it’s easier to spot where your problem areas are.”
If you’re worried about falling back into bad spending habits, a monthly budget could help you stay on track. According to Rose, creating a budget will help you set “firm limits on how much to spend in each of your biggest spending categories,” allowing you to hold yourself accountable for your finances.
Use Rose’s tips to shift your focus back to your finances. Doing so will help you create a realistic plan that can help you understand your finances and get closer to achieving your goals — whether you’re interested in qualifying for a higher mortgage or investing in projects that may raise your home’s value. With a little planning and determination, you’ll see your savings add up in no time.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Owners.com, Altisource or any other Altisource® business or entity. The foregoing content is not intended to constitute, and in fact does not constitute, financial, investment, tax or legal advice by the author, Owners.com, Altisource or any other business or entity.
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