Every American is a consumer or is at least one directly by the time he or she has money in hand and can make a purchase decision. When you were a 5-year-old, that decision might have been whether to buy a Snickers bar or a Mounds candy. These days, however, your decisions are a bit more sophisticated and include the car you want to buy or the house you want to own. If you were taught right by your parents, then you know a few things about money and how to use it wisely. In any case, a review of certain financial essentials can help you form or improve some effective habits employed by smart consumers.
1. Track your spending. If you want to see where your money goes, then you need to track your spending. There are a number of ways that you can do this, some you may already employ.
If you have a checking account, a credit card or other consumer account, then you get statements every month, offering details on what you bought, how much you spent and where you made your purchase. But, you also pay cash for many things including your morning coffee purchase, your visit to the gas station, the allowance you give to your children and other cash purchases. Keep a notebook handy and begin to track how you spend money each day. Review your purchases to determine what you can cut out. For instance, your daily visit to the coffee shop may cost you $3. If you brew it at home, you may pay 50 cents, for a savings of $2.50 per day. That becomes $12.50 per week and over 50 weeks you can save $625!
2. Set aside money with every paycheck. Each time you get paid, you’ll want to set aside some of that money for personal savings. That money is in addition to your retirement fund contribution such as your 401(k) or 403(b) account. Do not reduce these contributions!
If you get paid weekly, start off saving $10 per week. Over 52 weeks you will have saved $520. If your paycheck is credited to you via direct deposit, set up an automatic deduction plan that transfers the $10 to your savings account once you are paid. You won’t miss the money and will, instead, have built up your savings after one year. To reach a more ambitious financial goal such as paying for a vacation, buying a car or putting money down on a new house, increase your savings accordingly. By paying yourself first, you ensure that savings becomes a habit, not an afterthought.
3. Cash or credit? Credit cards are so convenient, yet they can become very dangerous, lulling you into spending more than what you can afford. That danger, however, does not mean that you should avoid credit cards, rather it should cause you to use such payment options very carefully.
There is one sure test that can help you decide whether using a credit card is good for a particular purchase — consider paying cash for the item. If your potential cash purchase causes you to pause, then you shouldn’t buy the item on the spot. Your hesitancy is a good thing, a pause that should help you consider your more significant purchase considerations. When you do use a credit card, make sure that you pay off balances every month. You’ll avoid fees and make good use of a convenient, but potentially problematic, source.
4. Ask for help. If you are deeply in debt or still mystified how to save money and reduce your expenses, then ask for help. A financial advisor can help you develop a budget and bring understanding to your complex personal financial needs.
When looking for a financial advisor, you will want someone that is competent, honest and clear about the steps you need to take to achieve financial independence. Look for an individual with experience in assisting people with their personal financial matters and gives you clear explanations of your options and offers a path to financial recovery. This individual should educate you and inform you of your costs up front. You may be eligible for free service through your state’s cooperative extensive service or your county’s community college.
Every consumer has the potential of becoming a smart consumer. Pay special mind to your finances and seek help when you need it. Financial independence takes time and is realized one dollar at a time.
Time: 7 Smart Bargains from People Who Know Best — http://moneyland.time.com/2012/04/26/7-smart-bargains-from-people-who-know-best/slide/keep-a-money-journal/#keep-a-money-journal
Read more: http://moneyland.time.com/2012/04/26/7-smart-bargains-from-people-who-know-best/slide/keep-a-money-journal/#keep-a-money-journal#ixzz24NnWmGpy
Wise Bread: Pay Yourself First: What It Means, and How to Do It — http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it
University of Hawaii Cooperative Extension Service: What to Look for in a Financial Advisor — http://www.ctahr.hawaii.edu/oc/freepubs/pdf/FC-11.pdf
Jenny Willis is a professional blogger that enjoys providing consumers with personal finance advice. She writes for Purechecks.com, a leading check printing company of designer personal and business checks.