It may be tough to get ahead when it seems like every dollar is going to something of importance, leaving you with not much left by the end of the month. As long as you are not going into debt by carrying a credit card balance over month over month, paying interest, you are in good shape, so it just means tweaking the household day to day operations a bit so that you can give yourself a little cushion to get ahead and avoid that feeling of sinking into debt.
Create a Budget
You might be surprised to learn that experts have said that most Americans do not have a budget, two-thirds in fact, that mean that most just operate on a spending free for all each month, which is pretty scary. In order to ensure that you can allocate funds correctly, it is a good idea to keep track on monthly finances with a budget, trying to account for all monthly expenses and spending on food, gas, and entertainment. You may have to adjust as you go along, making sure you are allowing enough, but at the same time, not too much.
Build an Emergency Fund
You never know what life with throw at you, so it is a good idea to be financially prepared for anything. Ask yourself, would you be able to pay for an unexpected auto repair or household appliance, or would it go on a credit card? What if you had an unfortunate job-loss, would you be able to survive for a few months until you find another job? It is a good idea to keep at least a few months’ worth of expenses in an account in order to have quick access to cash in case of emergency. Some say you don’t want to keep too much, otherwise you have a big sum of money sitting there when it could be performing better in, say, a brokerage account.
Reduce Unnecessary Spending
Really the best way to come out ahead is to reduce spending, specifically unnecessary spending. If you pull your last month’s credit card or bank account statement, go through line by line and see what was a needed monthly expense, versus what was not. Add up those that probably could have been avoided and see how much that comes to. You will probably be surprised that is a few hundred dollars, and that could have been best used to pay off debt or better yet, save for the future.
Speaking of savings, are you contributing to your employer 401(k) account? Have an IRA or brokerage account? If your company matches 401(k) contributions, it is a good idea to be putting in at least that. Beyond that, there are plenty of options to save for your future, weighing the benefits of being taxed now vs. taxed when you are ready to withdraw, so it may be a good idea to be in contact with a financial planner who is best suited to guide you through your future savings.