Unemployment may be down to 7.7%, but many Americans are still dealing with their own financial stresses. Here are some moves you can make to stay financially on track in 2013.
1.)Be sure to create and stick to a budget based on realistic numbers and information.
Use previous receipts to create a budget that reflects your actual spending over the last several months. Using this approach will factor in unexpected expenses such as home repairs, health expenses and car repairs as well as the normal, predictable expenses such as utilities and groceries.
2.) Plan ahead for big ticket items and holidays.
Discipline is the key here. Think of what you just spent over the holiday season starting at Thanksgiving and into New Years. These expenditures require significant outlays of cash in addition to your day-to-day expenses. Many stores have after Christmas sales, white sales, summer sales etc. Take advantage of these sales to purchase this year’s Christmas gifts, upcoming birthday gifts or electronics and appliances for your home. You will be able to save money on items purchased and spread the payments out over the year.
3.) Make sure insurance coverages are adequate.
Unexpected home, car and health care expenses can wipe you out. Make sure that you have adequate home, car and health insurance and that the deductibles are set at a level that if you have an emergency and need to pay it immediately you can afford it.
4.) Reduce Your Debt.
Lenders typically use a formula that includes a total debt load of no more than 36 percent of income. This will include your rent or mortgage, which will typically hover around 25 to 28 percent of your net income. This means that you need to get monthly payments on other items such as car loans, credit cards and student loans down to about to 8 to 10 percent of your monthly income. It is also advisable to watch your credit card debt. Interest rates on these cards are quietly inching upwards so pay attention to the monthly statements and try not to carry a balance from month to month.
5.) In 2013 Make Saving A Priority!
This cannot be emphasized enough. If you do not have savings or a financial back up plan, you are basically flying without a financial parachute. You will need savings to cover unexpected expenses and to protect yourself against job loss or long term illness. You probably know how much you spend on static costs such as rent, mortgage, utilities etc., but little expenditures add up quick. This is a good time to write down everything you spend money on for 60 days. You will get a clear picture of what you are spending and where you can save, from the daily coffee run to eating home more often or fewer movie rentals.
As we head into spring, this is a great time to organize your finances. Be dedicated to the long term financial principles of budgeting and saving and you will reap the rewards in no time!
Black Enterprise Columnist Jennifer Streaks is a Financial Author, Expert & Pundit. Continue the conversation by going to her website www.JenniferStreaks.com or following her on twitter @jstreaks.