People work in diverse fields, plying countless trades to keep the economy moving and bring home steady income. But as dissimilar as their circumstances may appear, a vast sampling of consumers share similar financial goals. For most, key priorities include saving money and extending financial resources, as far as possible.
Just as people make money in various ways, their approaches to personal financial management are also unique. Some successful money managers, for instance, lean on coupons, discounts, and retail bargains to stretch their budgets. Others sacrifice some of the comforts of daily life, to grow savings for the future. Still others build sweat equity, taking-on jobs most people hire-out. Each strategy bears fruit, so there is no single best approach. In practice, most people committed to making the most of their financial resources do so with a multi-faceted line of attack.
As distinct as your financial concerns may seem – you are not alone juggling the monetary demands of modern living. Use the following tips to find further savings and maximize returns – regardless of your income level.
Debt Adds a Budget Burden
For many consumers, money spent paying back personal debt represents a substantial share of each month’s budget. It is a natural piece of the financial puzzle, so debt itself is not necessarily a bad thing. Your mortgage puts a roof over your head and your car payment ensures you make it to work every day. Even discretionary debt like balances carried on credit cards probably reflects sensible spending, most times. Still, debt comes with a price tag, so prudently managing balances is one way for consumers to make the most of their money.
Debt takes several forms, so a comprehensive look at your finances may include credit card accounts, various loans, and other repayment obligations. Some loans are fixed-rate installment versions, which require the same payment each billing cycle. Mortgages, for example, are mapped-out for repayment at the time money is borrowed, so the payback schedule is clear, for the entire life of the loan. On the other hand, alternative short term financing, such as payday loans, operates on a shorter timetable, with repayment linked to specific, near-term dates. Since each type of debt comes with unique terms, prioritizing payments is one way to reduce the overall cost of credit. You wouldn’t run up a high interest credit card debt for home improvements, for instance, when a low interest home equity line of credit may be available, at substantially lower cost.
Recurring Expenses Create Ongoing Strain
The key to sustained financial stability is creating an affordable budget that addresses each spending obligation. If you are like many consumers, you’ll find a series of recurring costs at the core of your outgoing cash flow. Insurance bills, transportation costs, home loan payments, and other fixed expenses are examples of these types of ongoing obligations. Because they repeat, cycle after billing cycle, these financial responsibilities sometimes yield opportunities for savings. As you evaluate your financial state of affairs, look closely at recurring bills, with special attention toward big-ticket debt.
Home Loans – Recent economic conditions spurred unprecedented mortgage rates, prompting countless home owners to refinance mortgages, to improve payback terms. Shaving a few APR points from your mortgage has a dramatic impact on the price you’ll ultimately pay for your home, so this is a key area for major savings. Refinancing costs add-up, so it doesn’t always pay to take this step. However, even dropping from a 5% fixed rate mortgage, down to a 4% rate may indeed be worthwhile. Either way, it pays to run the numbers with a lending specialist, to see if you can cut costs.
Subscriptions and Memberships – One-time purchases add-up, in their own right, but ongoing commitments are often at the heart of money mismanagement. From entertainment and magazine subscriptions, to health club memberships, you may be leaving money on the table, by continually re-upping for goods and service. Are you watching all those cable channels you pay for each month? Who reads that daily newspaper? Does your lawn really need chemical weed killing sprays every two weeks? Answers to these and other spending questions uncover significant savings for those taking the time to assess these costs.
Fees and Add-On Charges – As the pace of modern commerce continues to accelerate; banks, service providers and merchants have little tolerance for anything outside the narrow standard defining consumer behavior. In response, every money handler seems to impose fees, charges and penalties, for one thing or another. If you are committed to cutting costs, you may need to modify your behavior, to avoid add-on charges. Always pay bills timely, for example, to mitigate late payment fees. And be aware whether or not your bank account has minimum balance requirements or other service limitations. For further savings, match your phone plan to your customary usage or you’ll end-up paying for costly overages.
Debt and recurring expenses are two major spending categories for most consumers. As a result, effectively managing credit accounts and shaving monthly spending represent two valid money saving approaches. If you are committed to stretching your budget, start with a close look at these two spending areas.