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Now more than ever, it is important to be clear-headed about your financial situation so that you can work towards a more secure future. In order to maintain healthy finances, you need to know exactly what state your finances are in.
The majority of Americans do not have any savings and would be unable to cover a $1000 emergency expense.
If you count yourself among that figure, now is the time to audit your finances, track your income, and get back on track. Here’s how to track your money and organize your finances so that you can get back on a firm footing.
Track Your Income
When it comes to financial tracking, you cannot afford to be in the dark about your income. You should have a clear idea of your net and gross income, including important figures such as annual income and total bonuses.
Oftentimes, simply adding your net paychecks together is not an accurate way to determine your real income.
Instead, you should use a free online YTD calculator (year-to-date) to figure out exactly what your net income will be for the year. When you have this data at your fingertips, you can make more informed and empowered financial decisions.
Track Your Spending
When you start to track your earnings, you are in a better place to track your spending and start to reign in any unnecessary purchases.
You can use a wealth of apps to track every dollar you spend. Meanwhile, your banking app will most likely offer some kind of tracking tool.
One of our top financial tips is to track your normal spending every day for a month and determine exactly how much you are spending on eating out, drinking, shopping, and entertainment.
You might learn that you are spending way more than you thought. Once you know your spending, you can bring it under control.
Track Your Investing
You will struggle to attain financial security if you do not invest. Cash is constantly losing its value, which is why you need to have a portfolio of assets that is diverse and can produce strong yields over time.
You do not need to invest in high-risk assets such as cryptocurrencies.
Instead, consider discussing with your bank low-risk options such as ETFs and bonds. If you do not have a 401K or Roth IRA, now is the time to get one.
Track Your Savings
Investing is important, but should always come second to saving. If you are saving zero dollars a month, you should not be investing at all.
Your first priority should be to set up an emergency fund that you can tap into in the case of a sudden shock expense. Ideally, your emergency fund should cover three to six months of living expenses, including rent and utilities.
This will take time to achieve if you have no savings. However, if you want to obtain genuine financial security, your emergency fund should be your number one priority for now.
Fine-Tune Your Finances
When you are able to track your income and your spending, you can make smarter financial decisions. Knowledge is power while being in the dark about your finances is a surefire way to stay poor.
We’re here to help you build a secure financial future, no matter your income. Consult our dedicated Financial section to find out how you can start making your money work for you today.
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