The average American has about $16,000 in credit card debt, $170,000 in mortgage debt, and $50,000 in student loan debt – not to mention other debts such as auto payments and unpaid taxes. Studies show that about seven in 10 Americans have $1,000 or less in their savings accounts. If you are one of many people with poor financial habits, this is the year to turn it around. Get out of debt and build your finances for the future with these tips.
Live Within Your Means
Learn to live within – and even beneath – your means. Find out how much money your household can comfortably spend without going into debt, and stick within this budget for your daily purchases. This may mean eliminating your coffee shop habit, as you could save $6.96 per week ($340.55 annually) by brewing your coffee at home. Set financial goals for your family, such as how much you can spend each month, and keep the rest in the bank.
Take Out Savings First
A common mistake people make when trying to build a savings account is putting money away after paying everything else. At this point, there may not be much – or anything – left to deposit. Instead, pay yourself first. Allocate a certain percentage you can afford to deduct from each paycheck and place into savings. Enroll in an auto transfer setup that makes this deduction for you. You’ll never miss another savings deposit.
Part of America’s spending problem stems from purchasing expensive products just for the brand name. You don’t have to purchase the cheapest goods, but shop for the best value for your money. Buy products you know will last, read reviews, and shop around before you invest.