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Budgeting is not a strong suit of Americans; it has not been for a long time. According to a report from the Center for Retirement Research at Boston College four out of ten Americans cannot cover a surprise four hundred dollar expense. What was more shocking was that of households making more than one hundred thousand a year one out of five could not cover a four-hundred-dollar expense. Almost eighty percent of Americans live paycheck to paycheck. This is an extreme problem for Americans. People in America will have a hard time retiring because of they cannot manage a budget. These statistics show why many Americans file for bankruptcy and carry large amounts of debit. Since the New Year is coming this is the perfect time to get your finances in order.
The first resolution should be to pay off all credit card debit. The average American pays 6,194 dollars of credit card debit. Credit card debit carries a high interest rate with an average APR of seventeen percent a year. This means that one’s debit can add up quickly without even taking on a new debit.
Once all your credit card debt is paid off the goal is to stay away from credit card debit. However, sometimes credit card debit is unavoidable. A car repair comes up that you cannot pay for, or an appliance needs replacing. Whatever the unexpected cost is, the best way to prepare for it so you do not go into debit is an emergency fund. An emergency fund is money that is set aside for emergencies only. An emergency funds size does vary by lifestyle and expenses. However, the average emergency fund should cover between three and six months’ worth of expenses. It is important to remember to after an emergency happens to replenish the account so that you will be prepared for another Emergency.

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After you have gotten rid of your credit card debt and have a fully funded emergency fund it is time to start investing for retirement. If your employer has a 401k use that. Roth IRA are another great way to invest your money because the government does not tax your gains. The rule of thumb is to invest between 10 to 15 percent of your income every month. If your employer is willing to contribute to your 401k try to get their full contribution, this is free money from your company.
While there are many ways to get smart with money, and ways to create wealth in the long run, these three things are a good start. This will not be an easy resolution. It may mean depriving yourself of some luxuries that you are used to having. However, in the long run you will not regret making the decision to be more financially smart. Depending on your financial situations these goals may take more than a year, or maybe it only takes a few months. Whatever your situation is it is never too late to start working towards financial independence.,six%20months’%20worth%20of%20expenses.,card%20APRs%20worth%20considering%2C%20too.


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