How to Manage Monthly Finances for a Bright Future
Tuesday, November 20, 2018, 6:00 AM | Leave Comment
The United States is home to tons of consumer debt. Recent statistics from the United States Federal Reserve in St. Louis, Missouri, were published just a month ago by none other than the Fed itself.
Dating back to August 2018, consumer debt in total rose a whopping 3.3 percent from August to September 2018.
According to the Federal Reserve Bank of St. Louis, Missouri, the total dollar value of all currently outstanding debt of Americans is some $3.95 trillion. This mark is roughly $10,000,000 less than the previous’ month’s closing amount.
As you can assume, far too many Americans are troubled with personal finance woes. One of the most effective tools in managing your own money is a budget.
Let’s touch over a handful of budgeting and money management tips you probably haven’t heard of.
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Are You Self-Employed? Make Sure You Understand Filing Taxes
Part of the American dream is to work for one’s self. Self-employed individuals do have to take on more risk, wear the hats of several different positions that aren’t currently filled, and aren’t able to receive benefits packages like 401(k) matching plans or health insurance.
Although arguably no job is more rewarding than succeeding as a self-fueled entrepreneur, these entrepreneurs shouldn’t forget that self-employment tax starts at 15.3 percent, a hefty size-up from employees’ beginning tax hits.
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No Matter Your Situation, it’s Budget Time
Believe it or not, far too many people fail to create budgets. Budgets can help individuals and couples understand exactly how much money they have to spare if something unexpected happens.
Rather than constantly keeping an arbitrary surplus of money, people should create emergency funds. Emergency funds are typically held in savings or checking accounts and should total a full three-month-minimum to six-month-maximum. This prevents people from having to pile on debt in emergency situations just to get by.
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The 50-30-20 Plan
Calculate your household’s income. The 50-30-20 plan dictates that followers save one-fifth of their after-tax income or pay off debt with it, spend no more than 50 percent of the total income amount must-haves like light bills paid with online payment solutions, and not spend more than 30 percent of their income on non-necessities or wants.
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Debt Should Go “Bye-Bye” before You Invest
Debt subtracts from your net worth. Investments, when utilized responsibly, almost always cause your net worth to inflate.
In nearly all situations, owed amounts’ interest rates will exceed the expected return on such investments. Never invest money before you pay off all of your debts. The only exception to this rock-solid rule is having a mortgage. Investing at the same time you have debt in the form of a mortgage is often acceptable.
The United States is one of the world’s most unequal countries in terms of income. Since wages haven’t risen when adjusted for inflation since the 1970s, a vast majority of Americans’ pay is growing smaller and smaller. As such, keeping one’s personal finance game in check often proves difficult. These tips should make such efforts easier.
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Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter and Facebook.
