Getting your finances in order can feel overwhelming, but a few key strategies can help. Here are five.
1. Pay Off Debt
From mortgages to credit card debt, eliminating the high interest that you pay on loans allows you to invest that money elsewhere. Pay off your credit cards each month, and make more than the minimum payments on all other debt.
2. Build Multiple Income Streams
Maximizing your income from multiple income streams brings in extra cash now and provides a backup in hard times. So even if you have the steadiest of jobs, you may want to assess your skills and consider starting your own small side business.
3. Buy Insurance in the Right Amount
At times, it can seem like we have a lot of insurance: life insurance, medical insurance, home insurance, auto insurance, umbrella insurance. But insurance is an important part of any long-term personal finance strategy. Many people have too little coverage, while others pay high premiums to cover moderate or minimal risks.
Review your true needs to get the right coverage for your lifestyle and portfolio.
4. Watch Your Credit Score
A good credit history will help you obtain a mortgage or some other loan at a lower interest rate. So, keep it clean.
In addition to maintaining regular loan payments, review your credit report periodically to identify and address any potential errors.
You can request a free credit report each year from the three leading credit bureaus: Experian, Equifax, and TransUnion.
5. Save the Entire Salary of One Spouse
This a stretch goal for most of us, but if you can swing it, you can see significant financial growth. If you and your spouse are both earning, develop a household budget that lets you live on one spouse’s income while saving the other’s income. You’ll have to be frugal, but you’ll be rewarded in retirement.