Many Americans experienced job loss and income reduction during the recession. As a result, personal debt levels have increased considerably in recent years. Data from a 2012 survey reveals that nearly 40% of Americans are carrying a monthly balance on their credit cards, and over half of US adults don’t have an established budget. Many people in this country are still struggling financially. If you are looking for ways to improve your financial situation after the recession, there are a number of approaches you can take. Here are five simple strategies that can help you save more money.
1. Establish a Budget
Tracking your expenses is the first step towards improving your financial situation. If you don’t currently have a monthly budget, don’t worry. Establishing a tracking system doesn’t have to be complicated. Consider using a service like the one provided by Mint.com, or if you are familiar with spreadsheet software, set up a customized system that makes sense to you. This can help you better understand your spending habits.
2. Reduce Your Spending
After you’ve established a monthly budget, it’s time to take a good look at where your money is going each month. Are you spending wisely or frivolously? Can you live without certain things if it means improving your overall financial situation? Keep in mind that reducing your spending slightly can have a big impact on your savings over time.
3. Set up a Retirement Account
Contributing to a retirement account is an excellent long-term investment strategy. If you’ve recently reduced your spending, consider putting the money you’re saving in a Roth or Traditional IRA. The benefits here are two-fold. Not only are you are saving for your retirement, these contributions will also boost your tax deduction for the coming year.
4. Make a Plan to Get Out of Credit Card Debt
Credit cards can be expensive. These products typically have high interest rates, and if you’re running a balance you could be needlessly spending hundreds of dollars each month. After you’ve established your budget and cut your spending, it’s time to come up with a strategy to pay down your credit card balances. Think about how you can effectively reallocate your finances to make this step a priority. You’ll be much better off financially after you’ve paid down credit card debt.
5. Pay Yourself First
If you receive your paycheck via direct deposit from your employer, consider paying yourself first. Set up an automatic transfer into your savings each time you get paid, even if it’s just a small amount of money. Remember, every little bit helps!
If you are interested in improving your financial situation, there are a number of ways to do it. Start by making a budget and then make a plan from there. You may want to reduce unnecessary spending, establish a retirement account, come up with a plan to pay off your credit cards, and set up an automatic transfer into your savings each month. For more tips on saving money, schedule an appointment with a professional financial adviser to obtain some helpful advice.