Know what you owe and make a plan to control debt by trying these tips:
- Pay off credit cards with high interest rates first — then stop using them.
- Pay as much as you can on your smallest debts and pay at least the minimum on large ones — even modest accomplishments can be great motivation.
- If you buy a home, it should cost no more than 2 to 2.5 times your household income, and your mortgage should be no more than 80% of the home's value.
Learn more about debt management with these tips.
Live within your means:
- Write down every expense for a month to see where your money is going. You may be able to identify extra money to apply to savings.
- Decide proactively where your money should go by making a realistic budget and sticking to it.
- If you have two incomes, experiment with covering all your expenses with one income and use the other for savings.
- Before buying something, ask yourself if you really, really need it. Maybe wait a few weeks to decide.
This income and expenses worksheet from the FDIC can help you review your finances.
- Give savings the same importance as paying bills, and save something from each paycheck.
- See if your company has an automatic savings program. Contribute at least enough to qualify for matching funds, if offered.
- Many experts suggest putting at least 10% of your income into savings — and some recommend as much as 25%. Sound too hard? Start with one percent of your paycheck and increase as your salary grows.
- Save enough in an emergency fund to cover at least three months' worth of expenses — six to nine is even better. If you ever use it, rebuild it fast.
Need a few more pointers? Visit AmericaSaves.org for a list of 54 ways to save money.