Top 10 Financial Tips

While making resolutions to improve your financial situation is a good thing to do at any time of the year, many people find it easier at the beginning of the new year. Regardless of when you start, the basics remain the same. Here are 10 top tips for getting ahead financially.

1. Pay what you're worth and spend less than you earn.

It may sound simple, but many people struggle with this first rule. Make sure you know your market value by evaluating your skills for what you do, productivity, job tasks, contributions to the company, and turnover rates in and out of the company. What is the cost of employment? A salary of less than $1,000 a year can make a significant cumulative impact over the course of your working life.

No matter how much or how little you're paid, if you spend more than you earn, you'll never get ahead. It's often easier to spend less than to earn more, and in many areas a little cost-cutting effort can result in savings. And, it doesn't always require making huge sacrifices.

2. Stick to a budget

An important step to consider when trying to get ahead financially is creating a budget. After all, how can you know where your money is going if you don't budget? How can you set spending and savings goals if you don't know where your money is going? You need to set a budget whether you make thousands or millions of dollars a year.

3. Pay off credit card debt.

Credit card debt is the number one obstacle to moving forward financially. Those little pieces of plastic are so easy to use, and so easy to forget that it's real money we're dealing with when we whip them out to pay for a purchase big or small. Even when we commit to paying off the balance immediately, the reality is that we often don't, and end up paying more for things than we would have if we had used cash.

4. Contribute to a retirement plan.

If your employer offers a 401(k) plan (or other type of employer-sponsored retirement savings program), you should consider contributing to it if you can afford it. Often, with 401(k) plans, your employer will match the amount you put into your account up to a certain percentage. This is often called an "employer match." If your employer doesn't offer a retirement plan, consider an IRA.

5. Have a savings plan

You've heard it before: pay yourself first. If you wait until you've taken care of all your other financial obligations before looking at what's left for savings, chances are you'll never have a healthy savings account or capital. It will not work. Commit to setting aside at least 5% of your salary for savings before you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.

6. Invest.

It is better if you are contributing to a retirement plan and savings account and still manage to put some money into other investments.

7. Maximize your employment benefits.

Employment benefits like a 401(k) plan, flexible spending accounts, medical and dental insurance, etc., are worth the big bucks. Make sure you're maximizing yours and taking advantage of those that can save you money by reducing taxes or out-of-pocket costs.

8. Review your insurance coverages.

Many people are tempted to pay too much for life and disability insurance, whether by adding these coverages to a car loan, buying whole life insurance policies when term life makes more sense, or when you Buy life insurance if you have no dependents. On the other hand, it is important that you have adequate insurance to protect your dependents and your income in case of death or disability.

9. Update your will.

In 2021, only 33% of Americans had a will.1 If you have dependents, no matter how little or how much you own, you need a will. If your situation isn't too complicated, you can do it yourself with software like Nolo's Quicken Will Maker. To better protect your loved ones, consider writing a will.

10. Keep good records

If you're not careful about keeping complete records, you may not be claiming all of your allowable income tax deductions and credits. Set up a system now and use it all year round. It's easier than scrambling to find everything at tax time, only to miss the things that could save you money.

Check in

How are you on the above checklist? If you're not doing at least six out of 10, consider resolving to improve. Choose one area at a time and set a goal to incorporate all 10 into your lifestyle.

Frequently Asked Questions (FAQs)

Where can you get free financial advice?

You probably won't get good investment ideas for free — financial advisors make a living offering their advice, so the good ones will charge for their services. Other types of financial advice can be provided free of charge, especially if you have a low income. For example