Start Managing Your Own Finances

| April 3, 2013
Your Own Finances

Your Own Finances

If you’ve just gotten your first apartment or are otherwise going out on your own for the first time in your life, learning to manage your finances is at the top of your priority list. Poor money management skills leave you behind on rent, in trouble with creditors or worse. Take the time to get started on the right financial foot–you’ll be glad you did years down the road.

Know Your Income and Expenses

The first thing you need to know is exactly how much money you have coming in and how much is going out. If you don’t have a steady job, it’s harder to estimate your income—so underestimate to be safe. If you’re salaried, you know the precise amount you’ll be bringing home each month. Add up all your expenses, including:

  • Rent or mortgage payments
  • Car payments, insurance, fuel and maintenance
  • Utilities, including electricity, telephone, etc.
  • Entertainment, such as dining out, concerts, going to the movies, etc.
  • Groceries
  • Necessities, including clothing and toiletries

Some budgetary advice suggests breaking down your expenses into two categories—fixed and variable. This leaves you with a firmer understanding of how much your expenses could fluctuate from month to month and a more realistic estimate of your bottom line.

Set Your Budget

Once you have a clear picture of your current financial situation, it’s time to set a budget. Are you spending too much on entertainment or non-essentials? Allocating the funds you need to the most important financial obligations first, such as your mortgage payment, helps you to plan your discretionary spending accordingly.

Know Where to Cut Back and How to Save

Good financial management involves smart spending. Look for ways to save by bundling utilities, such as your Internet, cable and phone. Benefits available through some employers, such as healthcare savings accounts, let you use pre-tax dollars to pay for qualifying out-of-pocket medical expenses. Similar programs are available for child care. A good tax accountant can help you identify ways to cut back on your tax bill. Research the options available to you to make the most of your money.

Set Aside Emergency Funds

The best-laid financial plans can go awry with a single unexpected expense. What happens if your vehicle needs a major repair or if you have a sudden medical crisis? Setting aside funds for emergencies means you have better odds of keeping your finances in check should an emergency strike.

Start Saving as Soon as Possible

Beyond an emergency fund, you should have a long-term savings plan. Many employers offer retirement savings plans, and some match a portion of your contributions. If your employer doesn’t offer retirement benefits, look into starting an IRA (Individual Retirement Account) to build a nest egg for your future. Other savings options, such as buying gold and coins from the US Money Reserve or investing in government savings bonds, also serve as viable long-term savings options.

Setting up a workable budget from the start will make your early years on your own much more enjoyable. Instead of stressing about finding the money to pay your bills, you’ll be well on your way to financial independence with smart planning.

Start Managing Your Own Finances

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