Navigating finances can be challenging — especially when you're dealing with conflicting scenarios such as carrying sizable student loan debt and balancing your budget on a starting salary.
Fortunately, focusing on fundamental savings strategies will enable you to strengthen your financial position, says Diana T. Stanis, Certified Financial Planner — and Executive Vice President of Planning at Family Wealth & Pension Management LLC.
Work toward achieving financial success with these moves:
Knock out debt
"The consequences of retaining debt are high," says Stanis. "Any balances you carry, and the more debt you have, delays your ability to save for the future." Work toward eliminating debt with these strategies:
- Pay down high-interest debt. "You need to set aside money every month to pay off high-interest debt, because it is costing you the most," Stanis says. Set up automatic payments from your checking account.
- Avoid the snowball effect by making more than the minimum payment on your credit card bills when possible to combat the interest that continues to accrue.
Stretch your dollars
Setting a budget and prioritizing spending categories frees up funds for savings. A few lifestyle changes can go a long way:
- When car shopping, consider quality used car models with warranties instead of new vehicles.
- Brown-bag lunches during the work week. Prepare dinners at home most nights, too.
- Review your cable, Internet, and phone plans to see if you are actually using the services you are paying for. If not, drop them. If your monthly rates seem to be creeping up, call your provider and ask them how you can get your bill lowered. If they can't help lower the bill, research other providers that may be available in your area.
- Rather than going out every weekend, host parties at home and encourage friends to do the same on a rotating basis.
Create a safety net
An emergency savings account comes to the rescue when you encounter unforeseen expenses. Aim to stash away three to six months' worth of living expenses. Start building your emergency fund today with these pointers.
Build a nest egg
If your company offers a 401(k) match, take advantage of it. "It's free money," Stanis says. If you are self-employed, "figure out how much you can save and select an appropriate qualified savings plan," Stanis says.