[IMGCAP(1)]In today’s volatile market, wealth and personal money management can be more daunting than ever.

Everyone, it seems, has advice about how to spend, how to save and how to invest your money in an economy that is less than forgiving. However, some principles do, in fact, stand the test of time. Here are some key tips that are important to know, regardless of the economic outlook. Understanding these principles can help everyone from young adults to retirees spend, save and manage their money effectively and efficiently.

1. Know your “nut.” A “nut” is how much money you require to fulfill your needs for an entire year. It should be a relatively conservative amount. Your “nut” should not include summer vacations, luxury vehicles or spending money. Your “nut” should, however, include car payments, home payments, electric bills, tuition payments, gas and other consistent costs. Many get frustrated because they save and save, yet still feel like they come up short when the bills arrive. Knowing your nut can help you plan your spending and save appropriately for those necessary costs.

2. Know what you have. It is important to understand how much money you have, and how your assets stack up. This means checking your account balances regularly, tracking your assets, watching stock prices, and recording your spending. Keeping track of this data will prevent unpleasant surprises from springing up at inopportune moments. Accounting and bookkeeping services can help you manage this.

Especially for small business owners, tracking spending and saving is incredibly daunting, but it is imperative to know where you stand at all times. There is little worse than receiving a bank statement at the end of the month that comes as a complete and unwelcome surprise.

3. Remember that debt comes first. It is no secret that paying off debt quickly should be a priority. The longer it takes to pay off debt, the more interest you acquire, leading to higher costs in the long run. If you are given a choice between paying off debt and making a big-ticket purchase, try to wipe out debt first. Along with that advice, remember to pay off items with the highest interest rate first. It seems simple, but it is a principle that many forget or choose to ignore.

4. Set objectives for yourself. Set financial goals for yourself. They should be specific, realistic and measurable. For example, “save money” seems like a great objective, but it is not as specific as it should be. Instead, choose a goal like “save 15 percent of each paycheck until I have enough money to purchase ‘X’.” These types of objectives have a definite end-sight, which makes saving money easier and more enjoyable.

5. Talk to your bank. It can be beneficial to keep an open dialogue with your bank. Many people are hesitant to talk to their bankers and approach them with financial questions, but the fact is, they are there to help. Most bankers are very willing to open up and answer any questions you have about loans, money management, saving or investing. This is a lesson in learning to use your resources. Bankers are professionals, and they are, in some way, trained in answering your questions.

6. Research, research, research. Know what you are getting yourself into, whether it is a new retirement fund, refinancing your home, or making a large mutual fund investment. Though it can be monotonous, read the fine print, talk to a financial advisor, read industry publications, or discuss your options with people you trust. There are too many risky financial missteps that can be made to skip the research. In the future, you’ll be glad you did it.

7. Online banking is your friend. Especially with older generations, making the jump to online banking is a bit intimidating, but it can really help you if it is used correctly. First off, automation is a great feature provided by most banks.

Automation allows a predetermined amount of money to be switched over from your checking account to your savings account at whichever time interval you please. This way, every two weeks when you are paid (or whenever you choose), you can program your online banking service to deposit a certain amount to your savings or emergency fund, an action that would otherwise require a trip to the bank.

Second, many banks are now beginning to charge fees for receiving paper bank statements in an effort to be more green. Receiving them online can save you from paying this fee, among others.

8. Get on the same page as your spouse, parents, siblings, etc. Whether you are married with a joint account or a college student spending some of mom and dad’s cash, it is important to have a common understanding about spending and saving money with those involved in your finances.

If you share a joint account with a spouse, talk with them about how much of your respective paychecks will go into savings. Consider the line between purchases that require your partner’s consent and the ones that are less important. Even in a situation as simple as having a roommate, make a plan for splitting utility costs or covering grocery bills. Having a predetermined plan can save you a headache later when the bills begin arriving.

9. Use your credit card. Some are adamantly against the use of credit cards in today’s spend-heavy society, but if you are a part of the majority, you rely on your credit card for a variety of reasons.
One of those primary reasons is typically to create and maintain a good credit score. A mythical, random or “meaningless” number to some, a good credit score allows you to refinance with the best possible interest rate. A credit score is one of the only ways that banks can determine your value and integrity as a customer, so if you want to take advantage of your bank, it may be best to join the club and work to get the best credit score you can.

Another fact to note: each of the three primary credit reporting agencies (Equifax, TransUnion and Experian) must provide you with one free credit report per year, according to federal law. Take advantage of this, and keep track of your score.

10. Save, save, save. No matter what age you are, you should begin saving for retirement if you have not started to do so already. Particularly for those in their mid-20s, it is imperative to begin saving early. If you begin early, you reap the benefits of acquiring compound interest, and your savings will work on your behalf. Ultimately, you will save much more than if you had begun saving at age 30 or 35. Especially with the Social Security crisis, one can never be too cautious in planning one’s retirement.

Bert Doerhoff, CPA, is the founder of Accubiz in Jefferson City, Mo. He is a nationwide speaker at business and finance conferences. He was appointed to the Advisory Council to the Missouri Director of Revenue and was chosen for the first ever National Client Service Accounting Firm of the Year Award presented by the National Association of Small Business Accountants.

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