Get Your Money Straight in 2017
Happy New Years!!! Out with the old and in with the new.
One of the things you definitely need to leave in the old year is your bad handling of money. There are certain things you should know about your finances so that you could get your money straight in 2017.
Let us realize that finances is like a square with four corners and you must spend the necessary attention to each corner so that your financial square can be in the right shape.
What are the four corners of the financial square?
III. Savings & Investments
IV. Discretionary spending
Before you can get your money straight, it is imperative for you to get a handle on your bills. You are never going to get ahead financially if you are always behind in your bills.
Delinquency and being past due can negatively impact your credit score which will result in you paying higher interest rates on future loans if you are approved to get them.
Therefore as 2017 carries on, do your best to pay your bills on time so that you could increase your credit score. Higher credit scores would result in lower interest rates on future loans.
The second corner of the financial square is debt. Car loans, credit cards, and other debts have a powerful impact on your financial situation. Too much debt can also negatively impact your credit score resulting in higher interest rates.
On the other hand, if you reduce your debt that would obviously increase your credit score helping you to pay lower interest rates on loans.
Going back to your first corner, if you are able to obtain lower interest rates, you could end up with a cheaper monthly car note and that would give you more money for the fourth corner, discretionary spending.
The third corner of our financial square deals with savings and investments. Every time you receive your paycheck, you should put a little aside for savings just in case of an emergency. It is unfortunate that most Americans do not have enough saved if they lose their job or if they need to get major car repair done.
You should always have a rainy day fund so that when an emergency comes, you do not have to spend your bill money or cancel your vacation to the Bahamas.
According to Investopedia, experts recommend that you should have in your savings at least six times your monthly spending. For example if you usually spend $3000 a month, you should have at least $18,000 in your savings.
Thus far, our financial square has dealt with outcome but with this corner, we can also talk about making income with your finances.
Depending on where you put your savings, you can draw some income. The average savings account pays 0.06% annually. That is quite small but you could make a little more if you put your money in money markets or bonds.
However if you want to make some serious income on your money, it would serve you best to invest. In 2017, start contributing to your company’s 401K or alternative option. According to Investopedia, the average rate of return for a 401K ranges from 5-8% annually. You can also invest on your own as well by opening an online brokerage account and directly buying stock.
Earning income from your savings and investments would definitely maximize your finances for discretionary spending, the last corner of the financial square.
Discretionary spending includes all the fun things you want to do with your money: dining out, fashionable clothes, vacations, etc. In 2017, discretionary spending must be low on your priority list after the other three corners because overspending in this corner would result in some serious pitfalls in the other three corners by getting behind in your bills, getting further into debt, and not having enough money saved when you retire if you are able to do so.
Therefore if you follow the rules of this financial square, you will be able to get your money straight in 2017.