Debt. A financial obligation that almost every individual endures in their lifetime. Whether you’re living paycheck to paycheck or in a better position financially, handling debt can be an overwhelming process.
But if you’re paying off student loans or a credit card bill, there are ways you can build your savings simultaneously. Your current financial standpoint is just as important as your future lifestyle and retirement needs, so it’s imperative to prioritize your savings now for long-term success.
Building your savings account and paying off debt at once is a method of its own. To move forward with this successfully, take the time to analyze your current cash flow. This can help you gain a better understanding of the money you have coming in, when mandatory deposits are leaving your checking account, and where you could be saving extra cash.
Look at your recent purchases, bank statements, and how much you’re contributing to your student loans every month. Determining the proper debt plan for finances will come easier after thoroughly examining your budget.
Here are four additional tips for achieving financial prosperity:
Be Responsible With Your Credit Card
The most essential component of using a credit card is paying off your credit within a grace period. This ensures you’re not racking up loads of debt over time. To avoid paying off these costs in large amounts, use your credit card responsibly and only for non-impulse purchases that you know you can pay back. As you’re attempting to save and pay off debt, the last thing you’d want to deal with is a higher credit card bill or worse, bankruptcy.
Create an Emergency Savings Account
If you work for a company that offers the benefit of a 401(k) savings plan, it’s important to take advantage of it for several reasons. As you’re making money from an employer, a certain percentage of your paycheck rolls into this account without the need to look or touch the money that’s in there. So, if you feel like you’re not saving as much as you want to for retirement, you actually are!
If contributing to your 401(k) plan is something you want to avoid, you could open an additional savings account through your bank or mobile app. Both offer great features that can grow your savings, and offer additional coverage for when you may need to overdraw your account without fees.
Choose a Minimum Payment Student Loan Plan
After working your way through years of education, it’s more than likely you’ll endure student debt. This could take years to pay off and can take quite a toll on your checking account if you’re not prompt with the way you handle it. Depending on your financial status and how much money you’re making, look into the possibility of making payments before the actual pay period begins. This will allow you to decrease the amount you have to contribute monthly, and ultimately lessen the amount of debt you’ll have to pay off overall.
If you’re making an income that isn’t sufficient enough to handle larger initial payments while still devoting money towards your savings, go with a minimum payment plan. As long as you’re not avoiding one or the other, you’ll lessen the amount of debt you’ve built up over time.
Consider a Part-Time Job or Side Hustle
Side hustles and part-time jobs are great options for building your monthly income. Whether you want to become a professional dog-walker, babysit for a family friend or create your own small business, each can provide you with an extra way to make money. As you pay off debt, the additional cash you’ll be making through a side hustle can reboot your savings and make up for the money you use to pay off other expenses.
If you find difficulty in seeking out a side hustle, create a list of your interests and utilize the internet to research options based off of your preferences. Make sure to take your income and availability into consideration as well. Even though part-time positions take up extra time and effort, it’ll be well worth the hard work as you see the advancements in your savings.
Setting achievable financial goals, making smart decisions and sustaining a positive mindset all come with maintaining a healthy budget. Stay motivated to create a future with as little debt as possible, make the proper adjustments to your financial game plan now, and you’ll be rewarded in the years to come!
Need help paying off your debt and building your savings? Get in touch for a free credit and budget counseling session.