We are living in a tough economy these days. A lot of times, people suffer from financial problems. From their bills to unexpected emergencies that pop out here and there, it is important to have a buffer wherein you can have the funds to use when you needed it the most. If you are going to stabilize your finances, here are some steps that you might want to consider.
Know how much you earn
The first thing that you need to do is to assess your income. You need to know how much money you are making after the taxes and all. If you are married, you need to assess how much is your combined income?
Once you have an idea how much money goes into your household, you cannow assess whether or not you are making enough or not. At times, people are making “enough”. However, with their lifestyle, their income doesn’t seem to last making it seem like they are living paycheck to paycheck.
Write down all your expenses
You also need to track your expenses. You need to know just how much of your income goes to your bills or those things that don’t really mean anything. Here, you will be able to assess your attitude when it comes to your expenses. You want to have a separate paper from the needs to the wants. Of course, different people will have a different definition of needs and wants.
Find an extra source of income
Given the tough economy, it is a good idea that you also find an extra source of income. In fact, if you want financial freedom, you will need to make sure that you have at least three sources of regular income.
You can have your own business or maybe work on other jobs. These are some things that can come in handy especially if you feel that the income isn’t enough. You could create an affiliate program that focusses on anything like cat repellents and make passive income.
You need to also think of your years when you are no longer capable of working. You need to make sure that you invest on the right things. Try to know your risk tolerance too if you are going for something that is risky. If you are going to start a business, be sure that you are going to evaluate everything. Do a lot of research and don’t just jump on a venture because you feel like it.
Mutual funds, stocks, and other investment vehicles can also be a good way to save. You will be able to find your investment growing as years go by.
Always have an emergency fund
Emergency fund should always be ready in your bank account. Before you think of investments, you will first need to have an emergency fund. It should be worth at least three months of your salary. This means that you won’t have to worry in case something happens with your job. You will need to make sure that you are financially stable especially if you are going to start living independently. It can be a challenge. It could mean that you will have to skip some Friday night drinking with friends. However, these things can really help you have peace of mind.