How To Improve Your Finances

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Six steps to help you achieve your financial goals.

If you’re like millions of Americans, improving your finances is one of your top yearly goals. To achieve your goal, you need a plan. Following are six steps to help make this year the year you succeed.

Write down your financial goals.

What is it you want to achieve? Do you want to improve your credit score? Do you want to have more money in the bank? Or start saving for your child’s college fund? Having a clear idea of your financial goals goes a long way in helping you to achieve them.

Determine your starting point.

To find out how your finances currently shape up, first review your spending habits. Many credit card companies group your expenses by category, so you can see what you spent over the past year on food, clothes, transportation and other items.

Then, check your credit report.

We’re all entitled to one free credit report each year from each of the major reporting agencies (TransUnion, Equifax and Experian). Reviewing your credit report on a regular basis can help you identify actions that are hurting your credit score (like late payments), mistakes that need to be cleared or unexpected activity that could point to identity theft.

Request your free copy from each agency at staggered times throughout the year so you can keep a good pulse on your credit. (Go to www.annualcreditreport.com for information on requesting your free copies.)

Always automate.

When you make things easy, it’s easy to stay on track. Set up auto bill pay through your banking account to avoid late fees—and dings to your credit score. While you’re at it, set up automatic savings as well. Just be sure to check your statements and accounts on a regular basis to avoid surprises and to assess your progress.

Rebalance your investments.

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When’s the last time you checked where your investments are stashed? That 80/20 stock/bond split that may have been ideal for you when you first started investing might not make sense for you today. The same may be true for the funds you selected with your work 401(k) plan. Not sure how you should rebalance your investments? Do some research to learn more about investing, or talk with a financial advisor.

Organize your accounts.

You likely have a few financial accounts—a checking account, savings account, insurance accounts, investments, retirement accounts, etc. Set up a system to keep all important documents in one location so you can easily and quickly find the information you need for a complete view of your finances.

Live below your means.

Most millionaires live by this rule—they know that wealth is from what you save, not what you spend. Of course, most of us aren’t bringing home the paychecks that millionaires do, but that doesn’t mean you have to spend more than you make. You can still find ways to save.

This article contains general information. Individual financial situations are unique; please, consult your financial advisor or tax attorney before utilizing any of the information contained in this article.

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Source: U.S. News & World Report, Associated Press, San Francisco Gate
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