Sometimes managing household finances can seem like a juggling. Between managing debt, saving for the future, and keeping track of what comes and going from regular bills, it can be difficult to prioritize line items that should be first in your budget. This short video can help you delve deeper into what is most important when it comes to saving and managing debt. If you are looking for more ways to build financial well-being, we are always here to help.
Sometimes life can seem like a list of competing financial priorities. Retirement savings. Debt. The House. University. That other debt. When you have a lot of things, it can be hard to decide where to place your next dollar. We have 4 tips that can help you balance debt management with savings for the future.
First, focus on eliminating debts that carry higher interest rates, even if you have other lower debts that seem to be easier to pay off and finish. The longer you keep the debt with high interest rates, the more expensive it will be. Whenever possible, try to pay more than your minimum debt each month. Eliminating it sooner rather than later will reduce what you owe over time and free up more money for more fun things, like drinks that come in coconuts.
Second, make the most of potential high-profit opportunities, such as your employer’s 401 (k) match. This means making sure you contribute enough to your retirement plan to get the full match. Research shows that up to 1 in 4 people do not get their full employment and this adds up to $ 24 billion that is not saved every year. * This is a lot of coconuts.
Third, check the emergency savings on your list. It is always a good idea to plan for at least three months of living expenses, including rent or mortgage, other bills, and food. It can be hard to think of withdrawing emergency money in addition to trying to pay off debts, but it will protect you from even assuming month debt if something unexpected happens. Think of it as an investment in trust and peace of mind.
Fourth, remember that tax-benefit accounts are your friends. These are great places to divert cash when you save specific goals. There may not be much flexibility in how you spend money on these accounts, but what you could earn on after-tax returns can be worth it. HSAs offer savings in healthcare with tax advantages. IRAs do the same for retirement savings and 529 for education. To get the most out of these tax benefits, choose your account types based on how long you need the money. If you save on a shorter-term goal, it’s worth financing taxable accounts, so you won’t have any limitations or penalties when making withdrawals.
If you are looking for more strategies to help you deal with debt and maximize your savings over time, financial advice can help. When you are ready to take the next step, we will be here. So will the coconuts.
* Research in financial engines, May 2015. Missing: How many 401 (k) employers match the contributions employees leave on the table? Available at https://www.edelmanfinancialengines.com/workplace/research/.
“Where should my next dollar go?”,
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