If you find organizing your crowded closet a breeze but shudder at the thought of sorting through your finances then you probably need a money makeover. Do not feel alone; I was 30 before I mustered up the courage to take a long hard look at my finances-and it was not pretty. However, I did learn that it is never too late to tame money fears and improve your financial situation. Give yourself a money makeover by facing the facts rather than burying your head in the sand. Put these financial makeover tips to good use and watch your money worries vanish.
Financial Makeover Tip #1
Begin your transformation by getter better organized. You have heard the old adage, “A place for everything and everything in its place?” Centralize your important papers and store them in one place. Take important financial documents like your life insurance certificates to the bank and place them in a safe deposit box. At the very least, purchase a fireproof box to store the documents in case of disaster.
Financial Makeover Tip #2
Know your net worth. Measure what you own against what you owe. Do this by comparing your assets with your liabilities. The results will give you a good read on how well you are living within your means. (Prepare for the truth, it may hurt.) Subtract your total expenses from the total income. If there is a plus sign in front of the total your doing good, if not, you should reduce your spending.
Financial Makeover Tip #3
Know where you are going. Set short-term and long-term money goals and think about how you will get there. For example, a short-term goal may be saving for a down payment on a car or new home. Long-term goals may be paying off large medical bills or general debt.
Financial Makeover Tips #4
A budget will keep you from going “hog wild” on the QVC channel every week. Adhering to your budget will assure your financial future and provide you with more options as you age. Review your income against your bills and allocate, on paper, where your money should go. A budget needs to include utility bills, mortgage payments, insurance, groceries, and gasoline costs. Assign a portion of your income to savings and your emergency fund.
Financial Makeover Tip #5
Credit companies like to gossip. If you miss a payment, everyone in the financial world will know about it. Get familiar with your credit report and credit score. The higher your credit score the better your credit, which means the larger the credit line that is open to you. Limited credit or poor credit will affect your ability to make major purchases so stay vigilant. You can sign up for a free annual credit report but honestly, you need to look at it more frequently than that. Financial advisors strongly encourage their clients to review their credit reports once a month or the very least every two months. Stay vigilant and question flaws on your report. Keep your credit report clean.
Financial Makeover Tip #6
Be proactive! If you know you will be late on a payment or are having a difficult time managing your credit accounts, make a call. Talk to your debtors and assure them that you will catch up. A failure to communicate may cause you to get some needless harassment. Vigilance will keep you from slipping behind on several accounts but sometimes the unforeseen occurs. Review your budget and make the necessary adjustments you need to catch up. Take action as quickly as possible to get back on top.