By Diann Douglas
Fall brings a change of season, so why not work on changing a few habits. It may be time to take a good look at the way you handle money and try a new strategy or two to redirect money where you want it to go. Extension Family Finance Specialists at offer a few ideas:
$ Pay yourself first – This means treating savings with the same priority as a mortgage, rent or car loan payment. The easiest way to “pay yourself first” is to have savings deducted automatically through an employer savings plan. If payroll deductions are not available, make a deposit into savings when you cash or deposit your paycheck.
$ Keep good financial records – Reconcile your bank checking account statement monthly to be sure you know exactly how much money you have to pay for expenses. If you have stocks or mutual funds, prepare a file folder for each one that you own and save the annual summary statement to help calculate your capital gain or loss when shares are sold.
$ Insure against large financial risks – Review your insurance coverage periodically. Family needs change over time, such as the reduced need for life insurance due to grown children who are no longer dependents. Be sure to cover risk such as liability, disability and loss of breadwinner’s income.
$ Invest for long term growth – History tells us that you’ll earn a higher return in stocks or growth mutual funds that invest in stock, over 10 years or more than any other asset class. If you have money invested, don’t panic in these economic times, think long terms, the market is coming back.
$ Live below your means – This one is so hard for most Americans, it means spend less than you earn and use the difference to reduce debt and/or save for future financial goals. This means refrain from overextending yourself. Those sales aren’t a bargain, if it takes you months to pay off the bill. To get a handle on spending, keep track by recording every purchase for a month. The easiest way to do this is to carry around a small spiral bound notebook. It may seem like a chore at first, but if you are honest with yourself, you may be shocked to see how much money slips through your hands. Once you have done this, you can begin to rearrange your spending habits and control where you want your money to go.
$ Borrow smart – “Shop” at least three sources before applying for a loan or credit. Compare the annual percentage rate (ARP), various fees and other loan features. Transfer existing credit balances to a lower-rate creditor or ask an existing creditor to reduce your rate. Always repay the amount owed quickly to reduce interest charges.
$ Set specific financial goals – Determine what you want, when you want it, and how much it costs. For example — you want to save a down payment of $2,000 for the purchase of a car two years from now. That’s a specific amount of money with 24 months to get there. If you do the math; $2,000 divided by 24 month comes out to be about $84.00 savings each month. Your task is to put away $84.00 each month to accomplish your goal.
$ Get educated – Take some time to learn about personal finance. You can take a class, read books, magazine articles or consult a certified financial planner. The extension service has a wealth of information on money management and we are just a phone call away.
$ Think Positive – When facing financial challenges, having a positive attitude in important. You can give up and think “I’ll never have enough money” or you can resolve to take action to improve your life. People who think positivly generally experience greater success because they believe that there is a connection between what they do today and what will happen in the future.
For more information on managing money, contact the Madison County Extension Service.
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