If you have just a day, we have you covered.
Anyone whos worked hard to reach financial security will tell you: it takes time to learn better habits.
However, you’re free to make great strides in a day.
Lets kick things off with the crucial question that many financial planners ask their clients: Why?
Why do you want to get your finances in order?
It could be travel, supporting a family, saving to switch careerswhatever.
Your answer will serve as the backbone of your budget.
From there, its time to pick a budgeting method.
The Subtraction Method:This is dead simple.
Add up all of your monthly bills.
Whatever is left is how much you’ve got the option to spend in a given month.
(dont forget the irregular ones!)
Determine your monthly take-home pay.
Divvy up your expenses into categories using the method you picked.
Come up with a system for tracking.
Were fans of budgeting toolsMintandYou Need a Budget.
They make it easy to get started, but youll need your bank accounts login credentials.
You canalways use Excel, too.
Be realisticwhen you decide how much to spend in each category.
Buffer some room for reality.
This is also important:you need an emergency fund.
Without one, too many people resort todesperate solutionswhen they hit a rough spot.
For now, it should just be a small pot to tide you over in case of the worst.
If you dont already have one, budget for this savings goal.
I go through each bill and research ways to save.
Weve done the research for you in ourbill-by-bill guide to saving on your monthly expenses.
Usea tool like WhistleOutto help you search.
Interest adds up, so its worth the call.Heres a script to help you do it.
Car insurance:Many of them offer discountsif you combine policies.
Start with those threeyou might be surprised at how much youll save.
Then audit all of your other monthly bills and see if there are additional ways to cut costs.
The best part of this exercise is you do the work once but continue to save month after month.
The first step: make a list of all of your debts.
Track them in a spreadsheet, or just write them down.
Make a column for the following: balances, interest rates, and minimum payments.
Set a general goal to pay off X amount of debt every month.
Second, pick a debt-busting method.
If youre on the fence,research showsthe Snowball is the more effective method.
People tend to stick to goals when they see progress.
Since the Snowball method focuses on quicker wins, many people find that motivating.
Whichever method you choose, the next step is to prioritize your debts accordingly.
Make a list of debts ordered by which one youll focus on first.
When your priority debt is paid, add that amount to your next debt on top of the minimum.
Then move on to the next debt, and the next one, until youve tackled them all.
Yeah, its easier said than done, but before you make progress, you need a plan.
Bill providers are also legally allowed to charge you a fee for having bad credit.
Discover credit card holders also get their scores for free on their monthly statements.
Once you know your score, you want to know where you stand.
Even if your score is excellent, though, you want to check your credit every now and then.
How to Read Your Report
Annualcreditreport.comis the best site for getting a free copy of your report.
Public record information: Any liens, wage garnishments, or bankruptcies.
Creditor information: The meat of your report, where youll see detail on each credit account youve opened.
Your accounts are split into two main categories: accounts in good standing and potentially negative items.
Youll want to review these items and check that theyre all legit.
The better you are at making payments on time, the higher your credit score will be.
According to the site: A few late payments are not an automatic score-killer.
An overall good credit picture can outweigh one or two instances of late credit card payments.
Amounts owed (30%):Lenders what to know how much outstanding debt you owe.
FICO also considers how long youve been actively using those accounts.
It also considers the number of accounts you have open.
Fixing your credit takes time, but reviewing your report is the crucial first step.
Many employers that offer a 401(k) also offer something called a401(k) match.
They match a portion of your own savings into the account, up to a point.
So for every dollar you put in, the company will put in 50 cents.
Most experts agree: you should at least put enough to get the match.
Revisit your budget and decide how much you might afford to save.
From there, you have to pick some investment options.
Your employer usually works with a broker to come up with a list of options to choose from.
Target-Date Funds: These funds are pretty simple and basic.
You pick your target date for retirement, then pick the matching fund.
Because theyre so simple, theres not much maintenance, as the fund adjusts your asset allocation over time.
The fees of target-date funds might be higher.
Blended-Fund Investments: These funds have a set ratio of stocks and bonds.
you might pick one thats appropriate for your situation.
This means youll have to consider your tolerance for risk and how many years you have until retirement.
Money Market Funds: Investor Place calls the money market fund a glorified CD.
Theres zero growth here, and, in fact, these funds barely keep up with inflation rates.
Basically, it comes down to your age, risk level, and how long you have until retirement.
Once you open your 401(k), there are a few things to keep in mind.
Youll get little to no growth with a money market fund.
If you ever leave your job, dont abandon your 401(k), either.
Youll have to roll it over into a new retirement account.
When that time comes,read our guide on how to do it.
And then there are 401(k) fees.
Open an Individual Retirement Account
Dont have an employer who offers a 401(k)?
You still want to save for retirement, and an Individual Retirement Account can help you save.
What if youre in debt, though?
Should you still save for retirement?
There are two basic types of IRAs: traditional and Roth.
Both of them offer a different kind of tax advantage.
In other words, you payless in taxes now.
However, when you retire, you wont pay taxes on any money with you withdraw.
In other words, you pay taxes now.
But that money will grow tax-free, which is awesome.
Not everyone is eligible for a Roth, but you cancheck your eligibility here.
If youre in a higher tax bracket now, you should go with traditional.
There are even more types of IRAs.
If youre self-employed, you might also want to open a SEP-IRA, for instance.
But for the most part, a basic traditional or Roth IRA is the way to go.
Again, youll want to revisit your budget to see what your own savings amounts are.
Many experts say you should invest at least 10 percent of your income for retirement.
That number might seem high for a lot of people, and thats okayevery little bit helps.
If you want more detail on how much you should save, though, wevewritten a detailed guide here.
The basics come down to:
Determine when you want to retire.
Estimate what your expenses will be in retirement.
Make an inventory of your current assets and savings.
you’ve got the option to easily do it online.
In the meantime, do some research and figure out what kind of investments you want to buy.
We recommend some really simple mutual fundsyou can get started with here.
That said, you might as well get started with the practical stuff.
In addition to these steps, make a goal to learn a little bit about money every day.
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