What Goes into Building Your Finances

When building your finances, there are many moving parts to consider. One of the first things is that you must understand how the different elements work together to make the most of your money.

For example, creating a budget, learning how to make your money work for you, and the advantages that professionals can bring can all move you closer to your financial goals.

Below are some ways to understand how finances work and make headway into creating and maintaining healthy finances.

Setting Goals

Before you can get started on any financial plan, it's important to set some goals. What do you want to achieve financially? Are you working toward paying off debt or saving for a big purchase? 

Do you have an emergency fund to rely on in the event of a disaster or any retirement planning setup? Knowing what your end goal is will inform all of the steps that come next.

Creating A Budget

Once you've identified your goals, it's time to create a budget to create a roadmap to achieving them. This is where all of the hard work begins—figuring out where your income is coming from, tracking expenses and allocations, and managing debt payments. 

You should also use this opportunity to identify areas where you can cut back or save more to put more money toward reaching your goals.

Some methods of creating and sticking to a budget can also include different bank or credit union accounts for different purposes. For example, you may open a savings account specifically to take care of your debts and have a different account for your emergency fund. 

You may also have accounts in different institutions, such as one in a bank and one in a credit union, for example, Bellco Credit Union, because of your incentives or history with those institutions. 

Finding advantages and methods of keeping your money on track for your intended purposes can go a long way toward furthering your goals.

Learning About Investing

If part of your financial plan involves investing (which it should), then now is the time to learn more about investing strategies and products. 

There are many resources available online that can help guide you through the process. A good place to start is by researching stocks and bonds, which are two of the most popular types of investments. You can also explore mutual funds and ETFs (exchange-traded funds). 

Learning about investing will help ensure that you're making smart decisions with your money that will pay off in the long run.

Finding Professional Help

If all of this sounds overwhelming or intimidating, don't worry—it doesn't have to be! The best way to build a solid financial foundation is by finding professional help from financial advisors or online tools like budgeting apps or investment trackers. 

These professionals can provide personalized advice tailored specifically to your circumstances and goals so that you can confidently make informed decisions.

Building a strong financial future takes dedication and commitment, but it's definitely possible! It starts with setting clear goals and creating a realistic budget that works for your lifestyle. 

From there, it's important to learn as much as possible about investing strategies so that you're prepared when it comes time to put your money in motion. 

Finally, feel free to seek professional help if needed; having an expert on board will ensure that your finances are managed properly for long-term success. With these tips in mind, anyone can become an expert at building their finances.

What to Do When Bills Are Too Much

It can be incredibly stressful when you constantly try to keep your head above water regarding bills. You're not alone - according to a recent study, 60% of Americans don't have enough savings to cover a $1,000 emergency.

If you're struggling to make ends meet, here are three things you can do to get some relief.

Loan Modification

One option is to modify your loans. This means working with your lender to change the terms of your loan so that it's more manageable. This can involve extending the length of the loan, lowering the interest rate, or changing the type of loan from a variable-rate loan to a fixed-rate loan. 

A loan modification is a good option if you're struggling to make your current payments but think you'll be able to eventually catch up.

Negotiation

Negotiation is often a good option for people who have a good history of making payments on time but are struggling due to a change in circumstances. 

When you contact your creditors and ask them to lower your interest rates or change the due date of your payments, you are effectively negotiating with them. 

This can be an effective way to get relief from high-interest rates or monthly payments that are difficult to make. Of course, not all creditors will be willing to negotiate, but it is certainly worth asking. 

If you can successfully negotiate a lower interest rate or more favorable payment terms, it can make a big difference in your financial situation.

Creating a Budget

The last option is creating a budget. This means looking closely at your income and expenses and coming up with a plan to best allocate your money. 

This can involve cutting back on non-essential expenses, such as entertainment or eating out, and redirecting that money toward paying down your debt. 

Creating a budget is a good option if you're not currently able to make all of your minimum payments, but I think you could if you were more mindful of where your money was going each month.

If you're struggling to make ends meet, know you're not alone. There are options available to help you get relief from your financial burdens. Loan modification, negotiation, and creating a budget are all viable options depending on your individual circumstances. 

Don't hesitate to reach out for help if you're feeling overwhelmed - some people can assist you in getting back on track.

Making a Budget… and Beating It!

A lot of people who do not earn great amounts of money know what it is like to calculate every buck they spend. Of course, the best way to make sure their finances are balanced at the end of every month is to make a budget. First, they have to plan for their common, fixed expenses such as their apartment rent or their car payment. In order just to do that, they must put the same amount of money aside month after month in order to meet these unavoidable expenses whose cost do not change over time. But then come what I call the variable or elastic expenses: it is in this column that people can contrive to yield some unspent money and invest it elsewhere.

Examples of elastic household expenses

Variable or elastic household expenses can represent a significant proportion of a given family’s budget. It is indeed not unimaginable that this kind of expenses can make up half, if not more of many households’ budget. If I had to explain in very simple terms what these variable expenses actually are, I would put it that way: variable or elastic household expenses are those expenses which do not cost the same amount of money month after month and for which cheaper or more expensive alternatives actually exist.

Food, for instance, is a variable expense. Although buying food is unavoidable, groceries actually do not cost you the exact same amount of money from one month to another. Buying different kinds of foods in order to squeeze some extra bucks is possible: you could indeed decide to buy the kind of meat that is on sale instead of going for another one that costs more. Making your own lunch instead of eating at a fast food restaurant is another choice you could make and that could save you money.

But food is not the only elastic household expense that exists. Gas, for instance, can also be considered a variable expense, especially if you live in an area where transportation means other than your own car are available. Of course, you can opt for a cheaper or for a more costly option at the pump when filling your gas tank. Yet, I consider gas to be an elastic expense because you could also opt for carpooling, for biking or for public transit when these cheaper options are realistic, adapted to your needs and available.

Entertainment, clothing, home energy, gifts, and the likes also are variable expenses. Since this kind of expenses is likely to be the only place where saving money is possible, this is where you ought to concentrate your efforts if you want to save money. I can already hear you say: “But I have planned some monthly savings in my budget and I have already allowed as little money as possible for food, clothing, entertainment, etc.” This is fine if you want to balance your budget exactly the way you planned it. But if your goal is to yield some extra savings – in order to invest that money elsewhere – you ought to consider the cheapest alternatives that are available when spending money for elastic expenses.

How can this be profitable?

By beating your budget and saving a little more money here and there, you can end up yielding even greater amounts of extra money in the long run. Indeed, if you already are investing in mutual funds, for instance, or in other financing strategies towards your retirement by budgeting a fixed amount of money every month, investing the extra money you save by squeezing your elastic expenses could be profitable in the long run if you invest it in your old days too.

Beating your planned elastic household expenses could also be profitable if you used that extra money in order to pay off your personal debt. Whether it is by redirecting that money towards your mortgage or towards your car loan, you could reduce your total interest costs significantly if you made periodic lump-sum payments, which most financial institutions allow. You could also think of using your budget surplus to pay off credit card debt – in you have any – since it is often considered the worst kind of debt to have due to the skyrocketing interest rates that credit cards carry.

And of course, you could even think of reinvesting your elastic expenses monthly savings in a personal project such as a trip, a new computer or any other thing that is important to you. After all, your efforts to beat a budget that is already tight should be rewarded. Now, it is for you to decide how you want to benefit from your efforts. It could be immediately, by purchasing a new espresso machine or it could be more long-term oriented, by saving for your retirement or by amortizing your mortgage on a shorter period. In both cases, however, the benefits of being thrifty when it comes to your elastic household expenses are quite blatant and inviting and yet, they will only come at the expense of sustained efforts to beat your budget.

About the author: Alexandre Duval is a blogger for Standard Life, a company that offers a wide range of financial products and services.