3 Tips to Help Make Sense of Your Personal Finances

For many people making sense of personal finances is equivalent to reading a foreign language. Earning a paycheck and paying bills on time are pretty straightforward and understandable, but all that other stuff— saving for retirement, investing, and budgeting— leave many people scratching their heads. It’s your hard earned money, you should know how to manage it. Here are three tips to get started.

  1. Live Within Your Means

Surely this isn’t new advice, but the accessibility of credit cards make it difficult for many people to follow. Living within your means requires budgeting and saving, which equates to saying no to frivolous purchases.

After deducting basic necessities from your paycheck (rent/mortgage, utilities, groceries, gas, insurance, credit card debt), place some money into savings. Allocate the remainder into fun funds such as entertainment, eating out, and hobbies. If you’ve run out of funds, then no more spending until your next paycheck.

People tend to run into problems after discovering they’ve spent too much on fun funds, choosing to put additional purchases onto credit cards. Eventually that discounted lamp is no longer a steal thanks to interest payments and growing credit card balances.

  1. Make Your Money Work

Albert Einstein once said, “The most powerful force in the universe is compound interest.” When it comes to money, Einstein’s assessment is on target. Most people are familiar with interest rates: the smaller the better when it comes to credit cards and loans, while the bigger the better for savings accounts. Interest rates can be the difference between hundreds of dollars, depending on the original monetary sum and interest rate.

Take saving a step further by placing your money into accounts where they may gain interest, such as money markets and certificates of deposits. What’s more is if you have trouble not touching your savings, these accounts will discourage withdrawals in the form of fees. They’re great solutions for those short term (3-5 years) savings.

  1. A Reliable Partner for Long Term Investments

Saving up for a new car or to redecorate your house is short term compared to saving for retirement or even a child’s future college tuition. These types of savings are investments, not only of your financial discipline, but in the manner they may grow. Because long term investments won’t be used until the distant future, they earn the flexibility of more diverse investing.

Diversifying your finances simply means placing your money into multiple kinds of accounts such as bonds, stocks, and real estate. This technique boosts the likelihood of financial returns.[1] This also means a reliable financial partner may help point you towards ideal diversifying options.

By reliable financial advisor, we mean a professional, not Ol’ Joe from down the block. A financial advisor can offer tailored advice to your financial goals and budget, and possibly even help your money grow. That’s a lot better than Ol’ Joe’s questionable advice of burying your savings under a mattress.

Now that help is available…

Whether you have a dollar or a million dollars in your retirement account you will be able to explore the value of a real advisor simply by visiting the Self Directed Brokerage Account advisor contact site. From this site you can begin to take advantage of the features of your retirement plan.  If you wish you can also download a fact finder sheet that can be used to create your personal retirement financial plan.

Most company retirement plans are eligible and more are being added every day.

[1]According to financial data collected by Informa Investment Solutions from 1996-2015 Diversification does not ensure a profit or protect against loss in a declining market.

To learn more about Rick Willoughby, view his Paladin Registry research report.

Other posts from Rick Willoughby