Getting Your Finances in Order

If you have taken it upon yourself to get your finances in order but are overwhelmed or unsure of where to start, this is the guide for you. Keep reading for some quick finance tips that can save you time and headache when getting your finances in order in 2022!

 

Emergency Funds

We are living in truly tumultuous times. It is becoming harder and harder to predict the future of the economy, and because of this having emergency funds in place is more important than ever. It is good practice to have at least 3 months’ worth of living expenses saved in an emergency account, but the more you can save, the better. Aiming for 6 months should give you plenty of breathing room. Doing all of this at the same time is unrealistic for most, so focus on putting a small amount into the emergency fund each month. Lots of banks offer services that can automate this process for you so you won’t have to worry about spending the time doing it yourself. Keeping the emergency fund in a completely separate account from your day-to-day checking also removes the temptation to use the emergency funds for something other than an emergency. 

 

Financial Planning

Creating a financial plan lays the groundwork for your future. Most financial plans contain a budget, where all of your revenue and expenses are accounted for. A budget provides an invaluable visual of where, and when, your money is going. This allows you to make quick adjustments that suit your lifestyle and needs. You can start making a budget in just a few minutes. Start by getting an exact figure of how much money you bring in in a given month, and then budget where each dollar will go for that month.

 

One example would be to use the 50/30/20 rule to divide your money up. Using this rule you would set aside 50 percent of monthly income for essentials like gas, food, rent, etc. 30 percent can be used for impulse buying, in other words, things you can live without but really want. The remaining 20 percent should be saved or used to pay off debt, or a combination of the two. Hopefully, this simplified example gives you a good idea of how useful, and simple, a budget can be. 

 

Retirement Savings

Nobody can determine the exact amount of money you will need for retirement. As stated earlier, we are living in unpredictable times. However, you can definitely estimate how much you will need and plan how to get there. The general rule of thumb with retirement savings is to have 2 times your salary saved in your thirties, 6 times by age fifty, and 10 times by sixty-five. This should be enough to grant you a steady income for retirement that allows you to cover your living expenses and affords you a few of the luxuries and adventures that perhaps you have been waiting for. Having both financial and conventional freedom during retirement is the ultimate goal of getting your finances in order, but focus on the smaller steps to avoid getting overwhelmed. 

 

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