Blog - Personal Finance

You need a budget to live within your means and save enough to meet your long-term goals. It is composed of the 50/30/20 method, which provides a great framework for budgeting. It breaks down like this:

You should avoid spending more than you make to keep debt from getting out of hand. In many cases, people have to borrow money from time to time, and sometimes getting into debt can be advantageous, such as acquiring an asset. You might take out a mortgage to buy a house, for example. Even so, leasing can sometimes be cheaper than purchasing, whether you're renting a car, a house, or even computer software.

When you get laid off, it's important to set aside money for unanticipated expenses. These include medical bills, car repairs, day-to-day expenses, and more. You should set aside three to six months' worth of living expenses. When you've built up your emergency fund, don't stop. Financial experts recommend putting 20% of your paycheck away every month. Continue funneling the monthly 20% toward other financial goals, such as a retirement fund or a down payment on a home.

The best way to protect your estate and make sure that your wishes are followed after your death is to make a will and-depending on your needs-set up a trust. It is also important to consider insurance: auto, home, life, disability, and long-term care. Recheck your policy on a regular basis to make sure it meets your family's needs through life's major milestones. Living wills and healthcare power of attorney are also important documents. While not all of them directly affect you, all can reduce the time and expense your next of kin will incur in the event of your death.
Educate your children on the value of money, how to save, invest, and spend wisely while they're young.

A credit card can be a major debt trap, but owning one isn't realistic in the modern world. They also have other applications besides buying things. Besides helping you establish your credit rating, they are also a great way to track your spending, which can be a powerful budgeting tool.
Credit just needs to be managed correctly, which means that you should pay off your full balance every month, or at least keep your credit utilization ratio at a minimum (that is, keep your account balances below 30% of your total available credit). Given the extraordinary rewards incentives offered these days (such as cash back), it makes sense to charge as many purchases as possible—if you can pay your bills in full. Most important: Avoid maxing out credit cards at all costs, and always pay bills on time. One of the fastest ways to ruin your credit score is to constantly pay bills late—or even worse, miss payments. Using a debit card, which takes money directly from your bank account, is another way to ensure that you will not be paying for accumulated small purchases over an extended period with interest.

Keeping track of your credit spending goes hand in hand with monitoring your credit score, since credit cards are the main means by which your credit score is built and maintained. The best way to obtain a lease, mortgage, or any other type of financing is to have a solid credit report. You can monitor your credit score from a variety of sources.

Retirement planning means preparing today for your future life so that you continue to meet all your goals and dreams independently. This includes setting your retirement goals, estimating the amount of money you will need, and investing to grow your retirement savings.
Every retirement plan is unique. After all, you may have very specific ideas on how you want to spend your retired life. This is why it’s important to have a plan that is designed specifically to suit your individual needs. Here is how retirement planning can help you:
• To maintain the standard of living • To be emergency-ready • To be prepared for a longer life • To fight inflation • To fulfill retirement goals • To leave a legacy
Investing is only one part of planning for retirement. Other strategies include waiting as long as possible before opting to receive Social Security benefits (which is smart for most people) and converting a term life insurance policy to permanent life.

Graduating students have many options for repayment and payment reduction. If you have a high interest rate, it might be a good idea to pay the principal off sooner. The benefit of minimizing repayments (to interest only, for example) is that it frees up income to invest elsewhere or to save for retirement while you're still young when compound interest will have the greatest impact on your nest egg. Borrowers can even qualify for a rate reduction if they enroll in autopay on their private and federal loans.

Due to an overly complex tax code, many individuals leave hundreds or even thousands of dollars sitting on the table every year. By maximizing your tax savings, you’ll free up money that can be invested in your reduction of past debts, enjoyment of the present, and plans for the future.
You need to start each year saving receipts and tracking expenditures for all possible tax deductions and tax credits. Many office supply stores sell helpful “tax organizers” that have the main categories already labeled. After you’re organized, you’ll want to focus on taking advantage of every tax deduction and credit available, as well as deciding between the two when necessary. In short, a tax deduction reduces the amount of income on which you are taxed, whereas a tax credit actually reduces the amount of tax that you owe. This means that a $1,000 tax credit will save you much more than a $1,000 deduction.