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Learn how you can beat this economy by mastering your finances. Get tools and tips to easily set up your savings and invest for your future.
It’s not impossible to handle your finances in this economy.Getting your finances under control is completely doable if you take it step by step.
Get a Snapshot of Your Finances
You have to be able to answer these questions with specific numbers, not estimates.
- How much am I (or are we) in debt?
- How much income do I/we take home each month?
- How much are the monthly expenses?
- How much do I (or we) have in savings?
- Am I behind or delinquent on any bills?
- How much is in my retirement account?
- What’s my (or our) net worth?
One of my favorite tools to pull that data quickly and easily is Personal Capital. We use to track our numbers.
It's free to sign up and they have a ton of tools to grow your wealth.
Once you have a clear picture of where you are, you can see what you need to improve on.
- If you’re behind on bills, your priority is to catch up. See if you can work a payment plan or have a yard sale to raise money.
- Keep your expenses lower than you income. Drastically cut expenses until you have at least a month or two of expenses saved. See if you can receive rewards/discounts with from your bank or memberships. Cut down on transportation expenses. Use a free spreadsheet to budget to get a snapshot of your current situation and build a plan.
- Pay down high interest debt as fast as you can. If you end up on unemployment, lower monthly expenses will make the check go further.
- Set aside some money, even $100/paycheck, to grow your savings. Start small and automate your money to put into savings. You’ll become use to the slightly small paycheck as you start savings. You want a cushion in case something happens. Even if the economy gets better quicker than anticipated, you should have something set aside for emergencies.
Be Too Valuable to Fire
You have to try and keep your employment as stable as you can. If you have already done so, start using the following tips to stay on board.
- Become a spokesperson for your company. Even if you’re not in sales try to see if you get another account for your firm. Search for idea that could being in money or cut expenses.
- Be sure the boss knows your value. It is YOUR responsibility to make sure that your manager and boss knows your accomplishments. Keep a record of your achievements and tactfully include them when reviews come up.
- Be a team player and occasionally lead. Pitch in when it’s crunch time and help the team to meet goal. Try to keep a positive attitude and avoid known complainers who sap morale. Without irritating your co-workers too much or your manager, take the lead on some projects.
Even if your job downsizes, you've been up a rack of wins and recommendations you can take with you on your next job.
It'll also give you leverage in getting better pay when you negotiate.
Stash Your Cash Somewhere Safe
Once you reduce your expenses and have some money, protect it.
Keep the number of bank and retirement accounts to the minimum. It’ll be easier to keep track of your money.
For money that you may need in 5 years or less, don’t invest. Put the money in a money market fund or CD.
For your emergency funds keep it in a high interest savings account. Ideally you should have 3-6 months of expenses in your emergency fund.
Build up the emergency fund to the point that if you lose your job, you’re not immediately having a meltdown.
Tax returns, inheritance money, unexpected gifts…..when you receive “extra” income, deposit it straight into savings.
How to Build a Budget Quickly
- Track what you spend in two weeks. It’s hard to cut back if you don’t what your weak points are, so grab a little notepad and write everything you spend for 2 weeks.
- Withdraw from your bank’s ATM once a week. Take out money you need to eat, tolls, etc. If you run out of money, then make a peanut butter and jelly sandwich or bring leftovers for lunch. Do not go back until the next week!
- Use your cash, not credit cards. Don’t defeat the previous step by switching over to your credit card. This will help you to stop acquiring new debt, which in turn can drain your savings. National average for standard, variable cards is around 14%, so eliminating new debt will help you.
- Base a tentative budget based on what you learned the past two weeks. This will help you avoid a rigid or unrealistic budget, which will only frustrate and discourage you.
- Repeat. Keep working at this. You’ll probably work on it a few times until you get it right for your circumstances.
Automate your finances as much as you can.
- Set up free online bill pay with your bank. Most banks and credit unions offer money and time saving feature. Spend an hour setting this up with your bills, account numbers, due dates, and amounts, and you’ll only need a few minutes a month to keep it up.
- Take advantage of your company’s 401k program. Try to at least set aside enough money to receive the company match as it’s basically free money in your pocket. Look for low cost index funds to put your money in.
- Have a small portion of your paycheck transferred into an IRA account.Once your build up your emergency fund, eliminated your credit card debt, and have increased your income; funnel some money into an IRA. You want to still look for low cost index funds to put your money in.
Your Take on Mastering Your Finances
What tips do you have on keeping your finances in check?