Wednesday, December 11, 2013

Money Management Tips

Budget (Photo credit: Tax Credits)
Buying a home comes with a whole list of new expenses, including a mortgage, insurance, and home maintenance. It’s best to have a working budget firmly in place before purchasing a home in order to avoid financial trouble further down the road.

A solid budget is one that meets both your short term and long term needs and goals. The key to any successful budget is managing money. Every budget looks good on paper, but remember, it’ll only work if you stick to it.

Making a Budget

When making a monthly budget for your household, you need to be sure to include all your expenses, including possible surprises or emergencies. Rent, utilities, car payments and groceries are the basics, but there are other expenses that can really add up. These extra expenses are the things that can really derail a budget if you don’t plan for them. Other expenses include savings, gas, entertainment, medical expenses, clothing, and shoes. Keep track of each expense, add them up at the end of each month, compare them to your income, and make adjustments where necessary.

Building Savings

The key to weathering any financial storm is a savings account. Unexpected expenses are going to come up in life, and there’s no way to stop them. Kids break arms, employees are laid off, roofs need to be replaced, and cars break down at the most inconvenient times. A savings account is the solution to all of these problems. It’s best to have at least 3 months worth of income set aside in savings before buying a home, so you won't have to worry about losing your home every time things get rough. If you can swing it, 6 months is even better.

Covering Your Assets

Insurance premiums seem like a waste of money when you send out the payment each month and receive nothing in return, but they are a real life saver when you need them. Suffering an uninsured loss can lead you to lose your vehicle, all your savings, and even your home. Protect all of your hard work by staying properly insured.

Managing Debt

Debt is a normal part of American life, and it can be healthy for your finances if you manage it properly. Your mortgage, and a couple of well-managed credit cards are great for your credit, but be careful not to get in over your head. If you ever find yourself using credit to make payments on other debts, you know you’ve got a problem. You’re debt should always be kept at a level where your monthly income is enough to cover all of your payments, with plenty leftover for other expenses.

Planning for the Future

All of the budgeting tips listed above will keep your head above water for now, but what about in the future? At some point you’re going to want to retire, and the time to plan for that is now. Meet with an experienced financial advisor to find out what kinds of investments and accounts you should be participating in so you can meet your long-term financial goals.

Author Bio: Tiecen Anderson
In her former life, Tiecen worked in sales and marketing for a large insurance company. Before starting a family, she decided to switch gears and pursue a career that would give her a little more time at home. She finished up her degree from California Sate University in 2008 and started picking up work as a corporate web content writer. She enjoys learning new things every day as she works with a wide variety of clients, like Axiom Financial.

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