Managing personal finances for some is a necessary evil, while for others it can be an enjoyable pastime. Whoever you are and however you handle your money, there are common mistakes we all tend make. Here are 5 ways most Americans fall short while handling their personal finances.
1. Although most money experts suggest keeping six months income or more saved away, 50% of Americans have less than one month saved, and the savings rate continues to decline.
2. 23% of Americans have nothing saved for the long-hall, like a retirement fund.
3. People can spend up to 18% more when they swipe a credit or debit card than when they use cash or check as a means of payment.
4. 64% of young adults have no idea what their annual interest rate is for their credit card.
5. 57% of Americans do not live on a budget even though it is impossible to keep proper track of personal finances without one.
To get a better grip on your personal finances, begin saving 10%-20% of your monthly income. As soon as the check goes into the bank, transfer the money into savings to help curb the temptation to spend it. Start to cut out small expenses from your day to day life, like the morning cup of coffee you purchase when you could easily make it at home, or the name brand items at the grocery store that have generally as tasty or efficient store brand options, and only lack the name you are so use to seeing.
Make eating out a rarity rather than a common experience. Decide before hand how much you plan on spending and bring the exact amount in cash. Doing so will force you to say no to an extra appetizer or a dessert at the end of the meal. Hey, you may even save on calories! Follow the same strategy with any shopping experience. If you only bring 100 dollars to the clothing store, you will only spend 100 dollars, or less, on clothes.
Get in contact with your credit card companies, realtor, and student loan lender. A short conversation with any of these companies can lead to a lower interest rate, or at least give you more knowledge regarding your personal finances.
To truly understand your personal finances, you must know how much money is coming in and out of your house. Sit down and immediately write down the obvious bills like your rent or mortgage, utilities, phone, and car payment, so that the process of creating a budget will seem less overwhelming. Then begin to estimate miscellaneous expenses such as monthly gas for your car, hygiene and homecare products, and luxury expenses like eating out. It is helpful to look over your bank statement to ensure your estimations are as accurate as possible.
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