5 Essential Ways to Keep Your Finances on Track

FinancesEveryone wants financial stability. However, many people struggle to keep things on track as they fall into debt and make unwise financial decisions. For people in addiction recovery, addressing financial health can be extremely beneficial because money issues are a common cause of relapse. So, if you’re a recovering addict, it’s more important than ever to get your finances in line. Here are some of the best ways to track your finances so you can stop worrying about the future of your money.

 

1. Determine Your Net Worth

 

One of the best ways to measure your financial progress over time is with your net worth. Net worth is a measure of your assets (everything you own) minus your liabilities (everything you owe). If your financials are in good health, your net worth will grow as you continue to earn an income and contribute to your savings. If your net worth is negative or starts to go down, this is an indication that you need to cut spending and try to save more. Take inventory of all of your debt and outstanding balances. Make note of interest rates and how much monthly payments are costing you. Your net worth will likely benefit from paying off some debts completely instead of contributing to interest each month.

 

2. Develop a Monthly Budget

 

The simplest way to stay financially healthy is to avoid spending more than you make. If your net worth is decreasing, then you need to cut back on your spending or find alternative sources of income. If it’s doing well, stay on track by budgeting your expenses and savings. The Balance recommends creating a budget to help you prioritize your money and plan for your future. Gather your financial statements, all sources of income, and list everything you spend money on each month. After totaling your monthly income and expenses, you can make adjustments by removing unnecessary spending or allocating more money into your savings.

 

3. Keep Your Bills Organized

 

Keeping on track of bills will help you avoid paying interest and late fees. Keep all of your bills in one place and open them as soon as they come in. You can even scan your paper bills to store them with your digital bills if you have the time and technical know-how. Don’t leave bills unopened because you’re already behind or you don’t want to face how much you owe. This can make your financial situation worse, especially if there are unexpected fees on them that you won’t discover until much later.

 

4. Make Cost-Cutting Lifestyle Changes

 

If you want to put more money in your savings, there are surely some sources of spending you can cut from your life. For example, eating out is expensive because you’re paying for the service, the cook, the location, the food, and for the restaurant to make a profit. Cooking for yourself costs a fraction of the price and ends up being much healthier as well. You can reduce electricity bills by using energy-efficient bulbs in your lamps, installing a programmable thermostat, sealing every inch of your home off from outside and turning down your water heater to about 120 degrees F. Look at your budget and see where else you can make appropriate cuts.

 

5. Build up an Emergency Savings

 

Putting some money away can save you and your family from falling into debt when something unexpected occurs. Perhaps you or your partner are out of work for a while. Or, maybe you suddenly have to pay for a massive car repair. Having an emergency fund gives you something to dip into when you need extra funds quickly. According to Listen Money Matters, your emergency fund should cover about 3-6 months of your current essential expenses. Set a reasonable timeframe for building up this savings and work on growing it back if you ever have to use it.

 

Having a plan to keep your finances in order will give you peace of mind and let you indulge once in a while without feeling guilty. No one likes lying awake at night pondering their debts and worrying about bill payments. Get your financials in order now so you can feel prepared for anything.

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Saving for a Vacation Home: How Seniors Can Plan for the Financial End of Things

Vacation Home

Saving money for a vacation home can be difficult, and when you’re a senior on a fixed income, it can take some creative thinking to make sure you have the funds you need for the perfect getaway. Not only will you need to think about saving for a second mortgage, you’ll also need to consider the extra costs that you’ll incur from taxes and furnishing your new home. Then you’ll need to think about whether you want to turn your vacation home into a rental property when you’re not using it in order to recoup some of your investment.

A good financial plan begins with educating yourself about the real cost of a vacation home. Think about what it will take to make your dream a reality. Of course you’ll need money for the down payment, but you’ll also need funds to cover all the extra costs that come with a home, such as property taxes, utilities, HOA fees, and insurance, just to name a few. The location is a huge factor not only in cost, but in convenience, as the ideal vacation home is far enough away to be a “getaway” but close enough to your home that you can manage the upkeep.

Read on for some tips on how to plan for your vacation home and get everything you want out of it.

Location is key

The perfect vacation home means different things to different people. You may want something near the beach, near a ski resort, or in an area that has lots of restaurants nearby. You might want a home that fulfills needs for your health and well-being, such as a floor plan that works well for individuals with limited mobility. Take into consideration your lifestyle, your budget, and how often you’ll be using the home when you start your search, and gather some info on what the neighborhood is like as well.

Calculate well

Budgeting for something as big as a vacation home means doing some heavy planning. You need to make sure you’re familiar with all the rules of the area first, as some cities, homeowner associations, and resorts make their own set of laws when it comes to properties and amenities. Talk to a real estate agent and an accountant to get a good idea of what you’ll need to set aside.

Don’t forget the upkeep

Vacation homes often need updates when it comes to the kitchen and bathrooms, and these improvements can be pricey if you’re not careful with your budget and planning. One of the best ways to keep your home in good shape is to keep up with repairs and small changes rather than waiting to do them all at the same time. If you’re fairly close to your vacation home and can make a few trips a year for maintenance and upkeep, it will likely save you quite a bit of money in the long run. HomeAdvisor states that the average cost to remodel a kitchen is between $16,348 and $38,800, which is a big chunk of change. However, making green improvements, such as installing energy-efficient appliances or solar panels to the roof, can help you with tax credits as well as save you money on utilities every month, and that’s a great place to start with your budget.

Consider renting it out

While there are certainly downsides to renting out your vacation home, there are many upsides, too, including the fact that you’ll be getting extra income to help pay the mortgage. You’ll need to check and make sure this is an option before buying your home, as well as think about whether you’ll be available for emergencies should something go awry when the renters are in the home, but many vacation homeowners find this to be a great way to balance out the cost of the house.

Saving money for a vacation home starts with a solid plan, so make an effort to consider all your needs before you begin the process. Talk to your family about your plans and garner support and help from your loved ones to help make everything go smoothly.