It can be challenging to establish your financial footing. With a small investment of time, you can give your personal finances a do-it-yourself checkup to help keep your financial goals organized and help you to focus on your priorities.
Track your expenses for one month
Track your expenses for one month and you might be surprised to see how some small expenses add up. Your method can be as basic as listing how you spend your money in a small notebook or spreadsheet, or more high-tech with a smartphone app. Some banking software lets you categorize expenses and view reports from the transactions processed through your checking account.
Knowing where your money goes can be empowering. Once you know your spending habits, you can make adjustments to help you maintain your priorities and work towards your financial goals.
Create a budget
A budget lists your monthly income, subtracts your expenses, and shows what is left over after the obligations are paid. Extending your income and expense entries for several months or even the full year can help reveal months where there may be additional, periodic expenses such as annual auto registration renewals, insurance premiums, or taxes, so you can plan ahead for them.
Open a checking account (if you don’t already have one)
If you usually buy money orders to pay your bills, you may be surprised at how much the fees can add up over the course of a year. A checking account might be an easier, less expensive way to manage your money and expenses. Make sure to monitor your balance, review your statements, and avoid overdrawing your account as overdraft fees can add up fast.
Start an emergency fund
Unexpected expenses such as an auto or home repair or a medical expense can cripple your finances, but an “rainy day” emergency fund can help cushion the blow. Experts generally recommend having three to six months expenses saved up. This can feel like a huge undertaking, but with discipline over time, even a few dollars a week can add up.
Don’t be discouraged and keep building up your emergency fund. Some people open a separate checking or savings account dedicated to the emergency fund. Avoid the urge to tap into it for non-emergency use.
Buy only what you can afford
It might not feel glamorous or exciting but limiting yourself to buying only what you can afford could be liberating and help reduce your stress. When shopping, be careful about overspending. In-store financing promotions may be tempting, but many carry a high interest rate on balances and encourage you to overspend.
Watching your spending and making more modest choices might leave you with money to put towards bigger goals such as building your emergency fund or saving for an expensive purchase or vacation.
Check your credit reports for free
Check your credit report at AnnualCreditReport.com, a free service that allows you to review your credit reports from the three major credit reporting agencies. Your credit report will list the companies that you have debt with including mortgage, auto financing, and store charge accounts. Reviewing your credit report can help you spot errors in the report and alert you to instances of fraud or identity theft.
Your report for each agency includes your credit score based on the agency’s calculations. Your credit score changes over time and can improve with on-time payments and responsible use of credit. A good credit score can help when applying for credit such as a mortgage or auto loan.
The content of this document is for general information only and is believed to be accurate and reliable as of posting date but may be subject to change. Enterprise Bank does not provide investment, tax, or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein.