In the midst of the winter doldrums, some financial experts are looking ahead to spring. As a result, they're trying to instill hope in consumers who might have been having a tough time making ends meet.
Consumers who find money matters to be a little daunting might benefit from these simple words of financial wisdom. For instance, certified financial planners are recommending that you "pay yourself first" when you receive your paycheck. That means squirreling away 10% of your pay each pay period. A good rule of thumb is to place 6% in a retirement fund, 2% in an emergency fund, and 2% in a fund for your long-term financial goals. You can make the process easier by using auto-deduct. That way, you'll be saving money-without even realizing it. Once you get into the savings habit, you may find that you don't want to break it. It's also a habit that can become easier over time.
You might also consider putting your savings into an account that is not easy to plunder. Good options include money market accounts and passbook savings accounts. By maintaining a separate savings account that is not linked to your checking account, you should find it easier to maintain your savings. In this way, you will teach yourself how to get by on the income you earn, rather than on the income you'd like to earn.
Another sensible idea is to put half of your next raise in a 401(k) or savings account. You will still have additional money to burn, but you'll also be replenishing your supply of savings.
You should also make it a point to manage your debt well. That could mean paying off credit cards with high interest rates, or consolidating your credit card debt into a single low-rate credit card. It's a good idea to set aside money from each paycheck for paying off credit card debt, since this unsecured debt can really sap your purchasing power.
Meanwhile, if you own your own home, consider placing your consumer debt into a home equity loan that offers a lower interest rate than your credit cards do. While the average credit card rate stands at more than 15%, the home equity rate may be half that amount.
