Keeping Your Finances in Check: How to Stay on Track


Photo via Pixabay by Stevepb

Keeping your finances in order can be tricky; whether you’re just starting out in your career or ready to retire, there are always new things to consider and difficult decisions to make. Creating a budget — and learning how to stick to it — is one of the biggest components of staying on the right track, but it’s also important to learn how credit scores work and what you can do to keep yours in good shape. For older adults, it’s a good idea to start thinking as early as possible about how you’ll pay for your post-retirement years and what you can do to prepare for long-term care should you require it down the road.


For those who are thinking of making big purchases, such as a car or home, it’s imperative to do an overhaul of your spending and budget to make sure you can truly afford it. Think about the total cost of owning a home or automobile; for instance, you also have to add in the annual cost of insurance, taxes, and maintenance.


Keep reading for some wonderful tips on how to keep your finances in check.


Set a Budget


Setting a budget will help ensure that you can save a little money back each month, and it will help you get into the habit of sticking to a financial plan. Take a look at how much you spend each month versus how much you bring home; often, examining your spending habits will allow you to cut a few things out or swap them for something less expensive, such as trading cable for a streaming service, which will allow you to save without giving up anything.


Buy What You Can Afford


It’s tempting to open up new lines of credit when you have the option, but when it comes to making big purchases, it’s usually best to save up and pay cash or only charge purchases that you know you can afford to pay off. For those who are looking to buy a home, it’s important that you understand the total cost and to make sure you have enough for a down payment.


Check Your Credit Score


Your credit score can determine many things, from your ability to buy a car to what type of home loan you’ll be eligible for, so it’s imperative to keep it in good shape and understand how the score is affected. Applying for new credit can ding the score, as well as simply checking it on some credit sites. Get familiar with credit scores and what the average is, and consider signing up with a financial site that will help you monitor it.


Remember That the Little Things Add Up


Often, it’s the little things that add up when you’re trying to save money. Carpooling to work can help save on gas, but it can also prevent a lot of wear and tear on your car, which can help you save on maintenance — plus, it’s great for the environment. Couponing will take off several dollars at the register when you do your grocery shopping. Taking your lunch to work most days can save quite a bit; eating out can be pricey these days, even if it’s just fast food.


Keeping your finances on track can be stressful, but if you start with a solid plan and stick to it as much as possible, you can ensure that your money is right where you left it and keep stress to a minimum. Talk to your family about how they can help when it comes to saving money.


Savings: Does Your Desire to Save Match Your Reality?

“The only money that’s really yours is the money you spend.

Everything else goes to somebody else.”

Teddy Chafolious

Piggy Bank

That piggy bank we remember from childhood wasn’t just a place to store our birthday money and spare change: it was a lesson, a way our parents encouraged us to get into the habit of saving. Many parents even go so far as to deposit half of any monetary gifts their children receive directly into a savings account, just to drive the point home. Adults who took that lesson to heart might set up automatic deposits into long-term savings or retirement accounts from their paychecks every month – a modern mechanism for implementing this age-old lesson.


But the quote from Teddy Chafolious raises an important point: What are we saving FOR? Many new investors come to their financial advisors with a number in mind: “I want to save $1 million before I retire.” There’s even something of a fad among millennials who work as hard as they can, save as much as they can, and try to retire before age 50.


But why? After all, “you can’t take it with you.”


It’s important to have financial goals and committing to a regular savings plan is good first step towards achieving them. But if you treat your long-term financial planning as just a series of targets to hit, or numbers you have to drive up as much as possible, your return on investment is going to be a lot higher than your Return on Life – the feelings of happiness and fulfillment that your financial planning should provide you.

How much are Americans saving?

According to the US Bureau of Economic Analysis, Americans today are saving a lot less than they have in years past. Personal savings in the United States averaged 8.29 percent from 1959 until 2017. The rate for 2017 is hovering around 3 percent. Experts tie this historically low savings rate to increased household spending, which continues to outpace wage increases, and high levels of revolving debt, like credit cards.

Figures like these drive many people to the opposite end of the spectrum: they save as much as they possibly can, especially if they’re nearing retirement.

Finding balance.

We tend to think that the person saving more is doing a better job of managing his or her money than the person saving too little. But neither extreme is going to maximize your Return on Life. Spend too much enjoying the now, and you might end up having to work much longer than you want to – maybe even all the way through retirement. Save too much too early, and you and your family might miss out on the experiences that you deserve to enjoy with your hard-earned money: big family vacations, a new home, creature comforts, entertainment and culture that will enrich all of your lives.

Worse, new retirees who have spent their lives stuck in “savings mode” often have trouble transitioning to the reward mentality that should provide for a meaningful retirement. These retirees worry so much about running out of money that they often neglect their own wants and needs, to their emotional and physical detriment.

Reality check.

So how do you find that balance between enjoying today and preparing for tomorrow?

First, ask yourself if your rate of savings is in line with your reality. Are you saving so much that you’re not enjoying life as much as you could be? Or are you hovering around that 3 percent savings figure, telling yourself that you’re putting enough money away when you know, deep down, that you’re not?

Next, make an appointment with us to talk about your financial goals, and your vision for a dream retirement. Work together to find that saving/spending balance that’s going to align your savings with your reality, and hopefully, your goals and dreams. Find that sweet spot, and your money won’t just be numbers on a balance sheet. It will be yours.