New York's GDP contributes to 8% of the entire US economy — financial sectors contribute to over 28% of the New York real GDP. Rochester is the third-largest city in New York, and it's one of the more affordable cities in New York. With that said, financial planning is still daunting if you don't have a business background.
Many individuals think they've got their finances in check, but the reality is shocking. Over 78% of American workers live paycheck to paycheck. To have a secure future, you need to start financial planning as early as possible.
Financial Planning Tips To Manage Your Money
The first step to financial stability is to be equipped with enough financial knowledge to manage your money. It would be best if you also considered a professional financial planner to have a systematic strategy to keep your finances in check. Click here to know why professional financial planning is essential.
Otherwise, here are some of the practical tips to manage your money:
1. Live Beyond Your Means
It doesn't matter how much you earn if you don't know how to live beyond your means. If you check out people with high incomes, they'll increase their expenses with the increment in their salary. Because of this, they are always broke even if they earn a lot of money.
You don't have to give up all your hobbies or other “want” expenses. But there will always be something you spend money on that is worth no value in your life. Cut that out at first, then try to cut entertainment expenses that you don’t get to use often anyways, like Netflix or other subscription-based services.
It would be best if you also tried to get paid what you're worth. Check out the job market, job description, ask other people from the same profession to know your worth. Then, negotiate to ensure you're not underpaid.
2. Have A Practical Monthly Budget In Place
You need to keep track of your monthly revenue and expenses to know your loopholes. Make a list of all essential costs along with income sources. If there's something useless, try to keep it out. You can use spreadsheets for budgeting, but using apps can help you manage your money better.
If you've aging parents, you should help them manage their finances as well. It won't be easy if you have to support your parents too.
3. Clear Off Expensive Debt
Some debts are affordable, while some of them could be expensive. It's crucial to pay off all your debts, but getting rid of expensive debt should be your priority. It would be best if you mainly kept an eye on your credit card debts. They can take away a lot of your income if you're not careful. Pay more than the bare minimum for getting rid of expensive debts while paying off interest in other obligations.
4. Pour Some Money On A Retirement Plan
If your employer is offering a 401k plan or some other type of retirement plan, you should strongly consider pouring as much money as possible. Sometimes your employer will put the same amount of money to the fund up to a certain percentage as you. In case your employer doesn't offer 401k, you need to reach out to an IRA.
It's also a good idea to invest your money in a mutual fund, index fund, or other assets. Only relying on interest in your saving accounts will not help your goal of being financially independent.
6. Fully Harness Your Employment Benefits
Some employers offer benefits like dental insurance, medical insurance, flexible savings account, 401k, etc. Get the most out of your employment benefits, and save as much money as possible. You may also be able to save tax money via these benefits.
7. Review Your Insurance Coverages
Some people spend too much money on different types of insurances they may never use. If you're paying a lot of money for a variety of insurance, you should review all your coverage to see if you can save money.
For instance, paying for life insurance makes no sense if you don't have any dependents. Review every insurance policy and cancel those that make no sense to save money.
8. Learn To Minimize Your Taxes
Tax planning is essential if you're involved in investment and business. If you're an employee, you should submit claims like medical expenses, donations, childcare, etc. to save as much money as possible.
Your finances are your responsibility. Sadly, many people are incapable of living their lives without stress due to financial insecurity. Fortunately, the tips mentioned in this article can help you better manage your money.