Getting Your Finances In Order For Any Occasion

Everyday life can be a constant drain on resources. From expensive “firsts,” ranging from buying a new car and home and starting a family, to purchasing all of the insurance policies you need and covering emergencies, the issue of money and needing more is a common theme. However, financial security doesn’t have to be an unattainable fantasy. On the contrary, just a few simple steps can help you to reduce your expenses significantly, boost your disposable income and allow you to plan for any occasion in the future.

Reduce expenses

Adopting more of a minimalist approach to lifestyle and spending is a positive change you can make immediately. Today’s society is geared towards mass consumption of media, tech, products and services, but you could save a significant amount of money each month by cutting back on these non-essentials. Do you really need many of the luxuries you buy every month? To reduce your expenses, first write down all of your important outgoings, such as rent, bills, food and gas, and then non-essentials, such as meals out, vacations and hobbies. Many people are now using contactless and mobile payments, so it can be difficult to keep track of expenses. A list will give you a visual aid to work from so you can reduce your outlay.

Financial plan

Now you know what you are spending each month, you can outline a clear financial plan with specific goals. These goals could be to save a specific amount to purchase a new car or to build a safety net for emergencies. It is best to start with short-term targets, as these will be more readily achievable and will give you a sense of achievement each time. Regular short-term gains are also more likely to lead to long-term success. For example, you could set aside $200 each month and then work towards increasing that figure. Paying off any debt is arguably the most important step towards achieving financial security, so try to settle student loans and any credit card and medical payments as soon as possible.

Credit rating

Your credit rating is a system used by lenders to determine the risk involved when lending you money. If you are getting your finances in order to purchase a mortgage, then this is very important. A credit score is calculated based on factors such as your previous credit performance, the length of history, types of credit used and amount owed. You can check your current rating by ordering a report online. Those with credit scores of 760 and above generally have better access to interest rates on a mortgage. The easiest way to improve your score is to make all of your payments on time and to keep your credit utilization, which is the amount of available credit you are currently using, below 30 percent. Try not to apply for new sources of credit either.

Home service contract

Getting your finances in order will finally allow you to redirect your money into useful types of insurance and planning for unforeseen disasters and emergencies. A home warranty from Choice Home Warranty – a Home Protection Company, for example, will cover your home’s major components, including electrical systems and air conditioning, so you can access discounted repair and replacement services if anything goes wrong. It will give you peace of mind and provide reassurance if you are a new homebuyer and are not exactly sure how components have been maintained. Meanwhile, an emergency fund and a warranty can effectively act as a double buffer so you will be able to cope with any eventuality in your home.

Health, vacations and other luxuries

Sorting out your finances will also allow you to budget for health insurance. Costs for staying healthy are rising, so make sure to budget annually and account for increasing costs. You should also try contribute as much as possible to your Health Savings Account (HSA). To ensure you and your family are fully protected for the future, you could also take out life insurance, start contributing to a retirement account or save for a child’s education, using a 529 plan. However, budgeting for any occasion doesn’t have to mean covering for all life’s eventualities. You could instead opt to fund a dream vacation around the world or to buy a second home.

When In Doubt, Compare!

Of course, you can’t be expected to know all there is to know about personal finances.  If you come across something that leaves you unsure, try one of the many comparison sites that review the pros and cons of your choices.

Whatever the end goal, getting your finances in order will finally give you the freedom to pursue what you want, when you want, without worrying about debt or a lack of funds.