Staying Focused on Your Finances

We're all looking for distractions in this challenging time. And there's no shortage of options – social media, video games, movies, TV at your fingertips, the internet, and so on. Soon there will be augmented reality devices changing the way we view the world, and the battle for our attention will abound.

However, if you can rip your eyes away from the bright lights and blinking pixels for one moment, focus on something that will pay dividends – paying attention to your finances.

Here are some things that will make a huge difference if they’re made into good habits. Not only that, but these activities will keep you focused on your own financial well-being.

Budget

While some might prefer keeping it old school and sharpening their pencil for an analog approach to budgeting, there are also many free online tools to create a monthly budget. Using any one of the available spreadsheets and personalizing it to your own situation — Money In vs Money Out — will help immensely in terms of staying on top of one’s finances.

Only about 30% of Americans use a budget each month to track income and expenditures, and about the same low number have a long-term plan laying out savings and investment goals. 

Savings

Speaking of savings — since we’re paying attention to our financial future — let’s dive in. Here are a few categories of savings that are worth mentioning.

Retirement

When retirement does arrive, you’ll want to have money put away, so that you can live comfortably while not working. Start early and capitalize on as many opportunities as possible to secure your golden years in comfort. Whether you’re doing it on your own (IRA) or saying thank you to your employer for the monthly contribution matches to a 401k, the point is that you are contributing regularly to something that will most certainly come in handy.

Emergency Fund

Putting away a small percentage of your income every week or every month will soon add up to a larger-than-you-think fund that can get you through unexpected times of hardship — whether it be a medical emergency, resulting in not being able to work or anything else that fits this category.

Splash Fund

This is an account set aside specifically for extravagances — that flat-screen TV you wanted, for Christmas gifts for the family, that big date you’ve been trying to get, or whatever the case may be.

Building Fund

A fund set aside specifically for property investment/improvements.

There are about as many other specialized funds you could create as you could imagine things to save money for. But the point is that you’re saving for them, instead of buying on credit and sinking yourself into debt and further expenditures down the road to pay it off.

Cut spending

Find a better cell phone plan, eliminate the “dinners out” in spending, shop around for a better insurance plan, don’t spend unnecessary money on designer coffee every morning. These are just some things that can be done to retain those extra dollars you’re throwing away. According to an analysis by 24/7 Wall Street, Americans are spending 15% of their incomes on unnecessary items. 

That’s 15% of your income that could be put away into savings. By lowering your output of costs, you free up money for savings that were being spent anyway, and without having to earn an extra dime more than you already are.

These are just a few ways to pay closer attention to one’s money. By creating an environment of financial well-being, you may ultimately see a reduction of stress and a feeling of increased security, according to studies.  And we could all do with a little more security and reduced stress in this crazy, distracting world of ours.

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC