Ways to Improve Your Finances (Part 1)

If you read Money magazine you probably noticed a special report this past month called: 31 Ways to Improve Your Finances. As you probably know, I’m always on the look out for money management tips to share with others, or learn for my own personal financial management.  So, the title of this article definitely caught my attention.

Overall, there is some great advice in the article.  I recommend picking up a copy and reading it.  But out of the 31 ways to improve your finances, I felt there were 10 ways that stood out above the others (at least I liked them a lot ). So, in my next two posts, I’m going to share those ten 10 tips and provide some of my own thoughts around them.

Favorite ways to improve your finances (part 1)

Get in touch with a better reality

Essentially, this advice tells us not to worry about the economy and what it will do next. Rather, we should focus on making sure we’re covered in case something does happen in which we can’t control.

You can probably guess the practical financial tips here are to boost your emergency savings and cut out big expenses. Certainly, building an emergency savings is the one thing we can control. But, many people have difficulties finding the money to save for this purpose each month.  And those who are really trying have widdled away at expenses such as groceries, TV, etc.  I like Money’s idea of cutting out big expense items such as cars, private school, etc. that can get in the way of savings goals.  Cutting out such expenses, when not need based, can change emergency savings in a few months.

Work on your plan B

In regards to your employment, it’s important to have a plan B in mind.

Be brutally hones with yourself: Are fewer high-profile projects coming your way? Has it been a while since your boss asked for advice?

Money says aanswering those types of questions may be key in determining if it’s time to get your resume together. If this is you, there are a few tips you can follow:

• Get your resume updated and start networking with people in your field.
• Attend weekly or monthly seminars and meet new people to share your experiences and ask others.
• Go on-line and use networking tools such as LinkedIn to start getting connected to people again.
• Start speaking with a recruiter to set up some job interviews with potential employers to learn about new opportunities.

Put down the mouse (and remote)

The more exposed we are to TV, magazines, and internet the more our anxiety level can rise about market performance.

The inevitable fear of losing money that results from watching the constant ups and downs to the market can lead you to make some less-than-ideal moves with your money.

There is good advice here in doing quarterly check ups (versus daily) of your portfolio as well as conducting an annual re-balancing. Of course, finding a trusted financial advisor to work with you along the way and can talk some sense into you when you’re thinking about selling part of your portfolio is also important.

Stop keeping score

The article says one of the reasons we feel bad about money these days is measuring our progress against goals we created when the financial markets were at their peak.

If, say, your 401(k) balance was $250,000 two years ago, you may have in your head that the “right” number for your 401 (k) today should be higher, and feel disappointed that you don’t have more even if the investments in your plan returned 30% last year.

The financial tip here is to take new found money such as bonuses and reinvest in your retirement versus spending it all.  You should treat this new money as a regular part of your income and invest it or save it as you normally would with your regular paychecks.

Simplify your financial life

Simplifying finances is a biggy. Many people have 3 or more checking and/or savings accounts, credit cards and retirement accounts. Money’s advice is to pare down your credit cards and consolidate accounts. In consolidating or closing unnecessary accounts you’ll have less paperwork to manage and also require less time to maintain them.  I think you could take this a step further and think about ways to simplify your budget.  Sometimes budgets are overloaded with too many subcategories.  Having too many can be an expense tracking nightmare, so again, consolidate as much as possible.

What do you think about these ways to improve your finances?