Many people wonder if they're doing enough, saving enough or simply on the right track with their finances. Below are some basics that everyone should be doing. Once you accomplish these tasks with your finances, it may be a good idea to have an advisor review your portfolio, insurance coverage and savings rate. It doesn't take a lot of time, especially for the peace of mind you will get from squaring away your financial life.
1. Save monthly in an emergency savings account. Do what you can, but make it automatic. An emergency savings account will help you stay away from using a credit card when an unexpected expense pops up.
2. Save monthly for retirement. A general rule of thumb is to save 10% of your gross (before tax) earnings for retirement. If you make $40,000, save $4,000/yr for retirement. Save 15% of your gross income if you want a GREAT retirement.
3. Review your home and auto insurance coverage with your agent. With home prices moving up and down, it is important to know if you are covered when your house burns down or if you have towing included in your coverage. To save money, it may be beneficial to make your deductible $500 or higher.
4. Pick a weekly allowance and withdraw it weekly from your bank in cash. Using cash instead of credit will let you know exactly where you stand at all times. If you have $50 left on Wednesday and you are going out to dinner on Friday, stopping by the mall to shop will be out of the question. Or you may decide to shop instead of going out Friday. Either way, you are in control of how and when you spend your money - and if you can afford it. No more charging away and "hoping" there is money to pay the bill.
That's it! Doing these simple little steps will take you a long way in your financial life. Once your retirement accounts reach $20-25k, visit a financial planner to reallocate and help you with your next steps. You can do the beginning steps easily on your own (and for free!).