Managing finances is a proactive effort — if you think paying the bills and staying out of debt means doing a good job, then think again. Being proactive means periodically reviewing all sorts of expenses, investments and savings as well understanding the individual’s changing priorities and evolving financial situation. Also be on the outlook for opportunities to cut costs or get better rates for longer term obligations.
Why bother if you are not struggling financially? Because there is the need to keep up with inflation and increasing financial demands that are typical with an improving standard of living. To be sure of remaining on top of the finances, adopt those five habits.
Review all spending
Reviewing bank statements can help detect any instances of fraud, and also spot increases in spending, especially when it comes to auto-paid bills, if you have missed a notification. When reviewing the spending from bank statements, be sure to include the credit card statement. And make sure to notice any change in patterns. Many banks offer online tools that can help analyse the individual’s statement to see how much is being spent on each category, like health care, grocery, entertainment and dining-related needs, etc.
When using this financial tool, use a spreadsheet or any other way to take a closer look at the manner of spending. Try to find out of any change that could be draining the monthly budget.
Shop for better rates
Although you won’t — and should not — always pursue new service providers, it is a good idea to ensure one is getting the best rate on services like access to TV and the internet, insurance products, etc. These savings can be substantial because these are long-term contracts. In addition, an understanding of changing needs can help balance what you really value at the best costs. So keep the eyes open to see if there are offers out there that can help meet those savings.
Better rates also can come about as your financial situation improves. For example, if employed for a long time at one organisation, you might get preferential rates on car or personal loans because you appear to be a low-risk borrower. With that in mind, think of the current debt and consider refinancing if this means a lower rate.
It is easy to expand spending to the available income. But this should not be the case. A periodical revision of priorities is a must. You may not have cared about setting money aside for retirement or college education a few years ago, but now is the time to start.
Because priorities change over time and it is important to ensure that those savings and investments match these priorities.
Many employers offer employee assistance programs that can help with basic financial planning. Make use of this free advice to get a check up on your financial situation and make sure to be able to meet all current and future priorities.
If you have the luxury of not struggling with debt and have money to set aside, learn more about various investments — from stocks to real estate — as well as various savings vehicles. You might be comfortable depositing money in a savings account and which can come in handy if needed. But are you getting the best returns on that money this way?
Managing investments proactively or hiring a professional to do so can help make the best out of any situation. Again, you might commit to some long-term investments, but otherwise keep an eye on the investment market and stay abreast of the best ways to handle those investments.
Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.
Manage finance proactively
* Always review your expenses;
* Seek better rates on long-term spending;
* Consider refinancing debt into a better rate; and
* Know your priorities and options