Should you make paying off bills or saving a priority? How do you get ahead budget wise? Money headaches and digging out of debt are something so many people are struggling with even as the economy improves. Where do you even start? Here are 9 tips on getting your budget financially fit.
1. Know your take-home pay
Before committing to significant expenditures, estimate how much income is likely to be available for you. Your net income, after taxes and other deductions, is more important to estimate than gross income before deductions.
2. Start saving young
Recognize that your total savings are determined both by the interest you earn on those savings and the time period over which you save. The sooner you start saving, the more funds you'll be able to amass over time.
3. Compare interest rates
Shop around for the best rates on banking services, credit cards and other financial services.
4. Pay yourself first
Before paying bills and other financial obligations, set aside an affordable amount each month in accounts designated for long-range goals and unexpected emergencies.
5. Money doubles by the "Rule of 72"
To determine how long it will take your money to double, divide the interest rate into 72. For example, an account earning 6% interest will double in twelve years (72 divided by 6 equals 12).
6. Don't borrow what you can't repay
Be a responsible borrower who repays as promised, showing you are worthy of getting credit in the future. Before you borrow, compare your total payment obligations with income that you will have available to make these payments.
7. Get answers to your questions
If you're looking for some professional help-- don't fall for the scams that say we can help you pay off your bills--just give us $500. Make sure the person you go to is not trying to put you futher in debt. There's non profit agencies out there and even certified public accountants who receive continuing education and are regulated by the federal government.
8. Don't expect something for nothing
Be leery of advertisements, sales people or other sources of financial offers promising anything free. If it sounds too good to be true, it probably is.
9. Budget your money
This may seem the most obvious, but it's also the most crucial. Create a monthly budget to identify expected income and expenses, including savings. This will serve as a guide to help you live within your means.
How do you balance your budget? What are your secrets? We'd love to hear them !
Tips from The Massachusetts Society of CPAs (MSCPA)
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