My guess is there are some words in your vocabulary that you never thought would be there. Words such as fiscal cliff, sequester, and bail out. You may be thinking that though there seems to be prosperity, the economy feels a little shaky. You wonder if we ever recovered from the recession that started in 2008. You may be a little concerned if your personal finances will survive a roller-coaster economy. It’s really ok to be concerned, but don’t allow your concern to turn into worry. Instead, use it to make a plan on how you will help your personal economy grow and thrive.

The following are a few tips to help you best prepare your personal economy…

1. Always have a budget. A budget helps you tell your money where to go instead of your money telling your where it went. It’s best to always have a plan for your money. Plan out your budget for three to six months in advance. Doing so will reduce the number of surprises along the way.  Additionally, track your spending.  This will help you know how you are doing with your budget.

2. Establish an emergency fund. It is recommended to get $1000 in an emergency fund as quickly as possible. Doing so will help you be prepared for the little emergencies (i.e. flat tire, broken window, dog chews up the couch) that happen and will keep you from adding on to the credit card debt you may already have. Eventually you will want to build up your emergency fund to include three to six months of expenses so that you are even more prepared for any major emergencies. Emergency funds should remain easily accessible. I recommend a simple savings account or a money market account that you have check writing privileges on.

3. Get out of debt – NOW. It is much harder for your personal economy to grow if a portion of your paycheck is committed to MasterCard, VISA, or American Express. Make it a goal to get out of debt and stay out of debt.

4. Understand your personal finances and never purchase a financial product that you don’t understand. I think there is something to be said about remaining simple.  You want to have a basic understanding of what you make and how much money you spend on different things.  Also, it’s important to have excellent insurance in case of major event or emergency.  Great health, auto, home and life insurance can make all the difference.

I hope these tips help you grow your personal economy.  What are some things you plan to put in place?

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One Response to Your Personal Economy

  1. Teri Centner Teri Centner says:

    Your #4 reminds me of that old acronym: KISS, which stands for Keep it Simple, Silly. It can probably save you lots of mistakes not only in finances, but in other parts of life too. 😉

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