I have always been interested in finances and how they work. When I was first married, I took ownership of the household budget and thought I had it well in hand. Unfortunately, I forgot to track some of our expenses. I quickly learned a budget doesn’t work unless you know exactly where all your money is going!
In addition to keeping a close eye on your spending, here are five helpful ways to keep your finances on track:
1. Build an emergency fund
If the last few years have taught us anything, it is to be prepared for the unexpected. Whether it’s a car repair, medical bill or job loss, life happens. Saving a few extra dollars every month can add up, providing added peace of mind when an unplanned financial need arises.
2. Set up credit monitoring and fraud alerts
Preventing fraud (or reducing its effects) is a crucial part of any financial plan. Stay vigilant by activating credit monitoring and fraud alerts. Incorporating these layers of security can lessen the chance of losing money to fraudsters.
3. Start saving for retirement in your 20s
The sooner you start putting away money for retirement, the more time it will have to grow through compound interest. Even if you start with just $20 from each paycheck, every dollar you save now could turn into several dollars when you are ready to retire. Also, don’t forget to take advantage of employer-matching contributions!
4. Pay off the right debt first
When paying off debt, it is important to have a strategy. Make the minimum monthly payment on all debts while putting as much extra money as possible toward the debt you want to prioritize. If you want to save money or redirect funds to other financial goals, try focusing on high-interest debts first. If you want to stay motivated to stick with your payoff plan, go for the debt with the smallest balance.
5. Don’t overreact to the state of the stock market
The stock market is unpredictable, but maintaining your investments, even when the economy is uncertain, will pay off in the long run. Taking your money out of a share prematurely is likely going to end in a loss. Remember not to panic! Historically, the stock market goes up and down but investors have seen an annualized return of around 10% in the last 50 years.*
*forbes.com/advisor/investing/average-stock-market-return/
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