6 Tips For Setting Up Your Personal Finances
At Numerico in Livonia, MI, we know there’s more to personal finances than simply saving for a rainy day. If you haven’t already, it’s time to start asking questions like “How much should I save every month?” and “What is net worth?”. Below are six tips to start your journey for a promising financial future. For additional help beyond these tips, contact our professional accounting team.
Determine Your Net Worth
You can determine your net worth by first taking note of all the assets you own, including stocks, bonds, jewelry, cars, property, and money in your savings and checking accounts. From there, subtract your liabilities, including loans, credit card balances, utility bills, and mortgages.
Once you pay your personal debt, the remaining balance is your net worth. Those with a high net worth are considered wealthy, with around $1 million in assets, while those with a low net worth have fewer assets. Negative net worth means your debt transcends what you own.
Make a Budget
Next, learn how to make a budget. Sort through all expenses and paperwork, from grocery receipts to bank statements.
Calculate your household’s total income and monthly expenses, which include groceries, bills, and personal or childcare items. Note which costs vary each month, like transportation or gas, leaving leeway for added expenses.
If you’re spending more than your income, try to cut unnecessary costs, including salon trips or fitness memberships. If you’re earning more than you spend, consider saving for emergency funds and retirement.
If making a budget seems ominous, trust our certified public accountants to help get you started.
Save Money for Emergency Fund and Retirement
When you’re in good standing with your personal finances, you’ll be more prepared for unexpected expenses like car repairs or medical bills. We recommend putting at least three months’ worth of living expenses into a high-interest savings account in case of hard times.
Once you have an emergency fund, start putting money into a retirement fund. With questions about the future of social security, we recommend you take your future into your own hands by putting aside a little every month, including tax refunds and holiday bonuses.
Stay Disciplined | Avoid Debt and Impulse Buys
A new leather coat in the store window can tempt you out of saving towards your hard-saved retirement or emergency fund. Small but repeated impulse purchases like buying coffee every day on the way to work can be just as damaging to your savings.
To avoid impulse purchases, set a limit when shopping or take someone with you to keep you honest. A Numerico, can help you set a limit for impulse buys and learn how to avoid debt. Contact us today for short and long-term financial planning!
Invest in Yourself | Educate Yourself
If you’ve budgeted for the month, you probably think you’re on top of things. However, your personal finances also depend on your future investments. Educate yourself on how to remain financially organized and:
- Constantly alter your monthly budget: Everything from utility bills to the cost of your toothpaste can fluctuate. Revisions will help you spend according to your needs.
- Breakaway from luxuries: While you can treat yourself now and again, opt for a less expensive restaurant or a movie over an expensive concert whenever possible.
- Use accounting assistance, including budgeting apps or accounting services like Numerico.
Stay Organized | Keep Track of Your Finances | Automate if Possible
Staying organized, although key to good personal finances, can be overwhelming. Failing to keep track of your finances can result in forgotten bills or unpaid parking tickets.
To avoid this, keep your bills together. Either file your papers neatly on your desk or in a computer folder. That will ensure you don’t lose any when paying them.
Others prefer automating their payments. Rather than taking the time to pay them manually, an electronic service will take the precise amount out of your account regularly, guaranteeing payments are always on time.
Numerico | Personal Accountant | Livonia, MI
At Numerico in Livonia, MI, our accountants double as your tax accountant and financial advisor. We’ll help you budget and save for rainy days, nest eggs, and everything in between.