How To Look After Your Money

You don’t need to be a millionaire to look after your finances.

Everyone should take steps to protect their money.

Why it’s important to look after your finances

It’s understandable why the wealthy want to look after their money in order to keep their bank balances healthy and growing.

However, this should be a priority for everyone.

In a world where it was reported that in America two-thirds of the population would struggle to deal with an emergency which cost them $1,000, it’s more important than ever to ensure you are financially secure.

Common issues faced by people are:

• Income not covering bills
• Struggle saving for the future
• Falling into debt
• Poor spending or investment choices
• Feeling unable to spend money

Live sensibly within your means

If you are earning a certain amount each month, then obviously the amount you are spending shouldn't exceed the amount you’re earning.

However, just because you are earning a certain amount each month, it that doesn’t mean that you should spend it all.

Live within your means but be wise about, only spend what you can afford on what you need.

Invest smartly

Investments come with the risk that as well as gain you could also lose.

You should only commit to an investment if you can afford the long-term commitment necessary and you fully understand what you are investing in. It also doesn’t pay to be too loyal, investments are not static and sometimes it pays to invest your money elsewhere.

Do your research and don’t blindly follow the crowd, use your judgement.

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Save your money

The best way to look after your family's future is to save your money today.

You need to ensure that your family can cope with job losses or relationship breakdowns.

Investments and income will only get you so far, sometimes you need a lump sum of money stashed away to deal with unexpected situations.

Have financial goals

It is important to discuss your household finances and agree on some long-term financial goals.

These could be a simple as the age you want to retire or as complicated as owning your own business.

Create and maintain a budget

The best way to ensure you keep spending within your means is to create a budget and maintain it.

A budget needs to contain detailed information about your income and expenditures.

Your budget may need to be changed as your goals, income, and expenses change.

How you create a budget is up to you, you can either use professional software, or you can create your own using a spreadsheet.

Deal with debt

If you have debt, clearing it needs to become your top priority.

Debt can be damaging and the sooner you can eradicate it the better it will be for not only yourself but your family.

It’s important that you pay off your debts in order of priority.

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Protect yourself with insurance

If you can afford to, it’s important that you protect yourself and your family by looking into health, life, or disability insurance.

If the unexpected happened, insurance would act as a safety net to ensure that you and your family can manage during times of struggle.

Don’t let finances ruin relationships

Everyone in your household should work as part of a team.

Responsibilities should be assigned appropriately. 

If you have a spouse, you definitely need to discuss your financial concerns and goals, especially if you are struggling.

If you are not transparent about your financial situation or about your feelings, these may lead to greater issues in the future.

Why are Americans struggling?

Financially struggles are common amongst many families.

An estimated four in five Americans are expected to face near poverty at some point in their lifetime.

Why is this? There isn’t just one reason for the financial struggles facing many families across the nation, there are many. Such as:

• Job insecurity
• Loss of the manufacturing industry
• The global market
• Widening gap between the rich and the poor

The current state of the economy is affecting us all but what, if anything can be done?

There are certain areas which we could look at in order to improve the economy:

• The national debt
• Cost of taxes
• Social security
• Pension funds
• Cost of Medicare
• Cost of the military and defense

Unfortunately the longer these issues go unsolved, the bigger they will become.

The economy as it stands is unsustainable and tough decisions will need to be made in order to improve the finances of not just the country but also of ordinary Americans.