As crazy as it might sound, a recent Nielsen study found that one in four families lives paycheck to paycheck. Of course, this lifestyle has a lot of downsides, from unstable budgets to high anxiety when rent and bills come due. Do you constantly find yourself out of money at the end of the month? Then it might be time to ask yourself these essential money questions…
Am I Fair With My Monthly Budget?
As you likely already know, the first place every new money saver must begin is the monthly budget. Now, we all know that it feels fantastic to buy that new accessory, like a stylish pair of shoes or Airpods. Or, you might just enjoy not cooking dinner and eating out, or grabbing a Starbucks on the way to work. It might not seem like these make a difference, but if you add them up, they really do! So, first, ask yourself: do I really need all these purchases?
Unfortunately, far too many people believe that eliminating their morning coffee or Friday takeout will be some sort of magic bullet. That’s simply not the cast. However, if one takes the savings and apply it to the right places, in conjunction with other steps, its a fantastic start!
Should I Create An Emergency Fund?
Once you find out how much you can save every month, you need to decide where to save it. Most experts agree that you should start with an emergency fund first. A basic emergency fund has to cover around three to six months of living expenses in case of a major health issue, job loss, or the like. Eventually, when you have a nice emergency fund, you can redirect your savings to a high-yield, online-only savings account and begin to save for a new car, a trip, returning to college, or anything else your heart desires!
Am I Ready For IRA And 401(K)?
IRA – which means “Individual Retirement Arrangement” or “Individual Retirement Account” – is just a savings account for retirement. Meanwhile, a 401(k) is also a retirement plan, except it’s the employer who helps you take a percentage on the wage and save it for retirement. Both will help anyone, especially those who do not have time to deal with stocks and bonds, save for retirement. While saving money yourself in a high-yield savings account is a great start, no savings account will compete with the returns of an IRA. The only downside? You usually can’t touch the money until your retirement. Still, once you’ve set up a smaller savings account, an IRA, 401k, or both combined is what you should work on next.
From an IRA or 410k, if you still have some money and time left over, think about getting into the investing game. Both real estate and the stock market can give fantastic returns, if done right. Of course, always talk to a financial advisor first. Meanwhile, every step of the way, keep an eye on that budget! That’s where it all begins.
When trying to learn about money or open new horizons, it’s natural to feel confused. A financial advisor or budgeting classes can help a lot along the way.