While we are still in the start of the new year (2014, for those of us who still haven’t gotten used to writing it on our checks), it’s probably a good time to review all of those basic things you should be doing with your money. You should, of course, be sure to keep track of all these things and ensure that they are done throughout the year, but while you’re in resolution/remaking-your-life mode, it’s a good to ensure that you are completing these
6 Things to Do with Your Money
1. Put Aside Money in Savings: One of the top things on your list of what to do with your cash should be to make sure that some is set aside, out of the way, ready to be used should things go south for you (or you simply need some extra cash). I won’t go too far into the many circumstances and types of emergency funds (I’ve done so elsewhere), but be sure that you a) have money available, b) keep that money somewhere safe, and c) DON’T SPEND IT! I cannot stress that last point enough. As to how much to save, many people recommend at least 3-6 months for your emergency fund (and of course, if you are seeking to buy a home or make another major purchase, that should be in addition to the emergency fund money).
2. Start Paying Down Debt: One of the big things you should do with any available money, getting rid of your debt is always a good plan. What approach you should take to debt elimination is a major issue that is seriously debated among personal finance types, but putting money towards making yourself debt-free is definitely a good option (one I’ve embraced). I’d love to provide you with the perfect guide to debt elimination, but there are so many factors to consider, I really can’t. I’d go for the highest interest debt first, but simply putting additional money towards paying a debt, any debt, will help to improve your financial situation. (Assuming you don’t leave yourself without savings in the process.)
3. Start Investing: Another major good option for any money you have available is to start investing it. I won’t even attempt to cover all the finer details of investing and the methods available; entire libraries have been written on the subject, including those by me, so there’s plenty of information out there. As with debt elimination, the important part is to get on the horse, although in this case, you need to be more selective about which horse to ride. A good starting point would be the easy method perhaps in an IRA (Traditional or Roth is another major debate; shoot for Traditional if you are facing large tax bills, Roth if you aren’t, and things should work out).
4. Earn More Money: There are lots of ways that you can add to your funds if you put your mind to it. Everything from building a side business to trying some truly unusual methods can allow you to increase your income and the amount of money for other goals. As you might guess from everything I’ve said, a single article is too short to cover all the finer points of this suggestion, particularly when it covers nearly every money-earning possibility that exists. Just…put some effort into getting more money through methods you can seek out, and you’ll be better off. (Just don’t strain yourself too much in the process.)
5. Get Life Insurance (If Needed): This is more of a tentative To-Do item, depending on how many people are dependent on you and your income. If you are a major income provider of a household, you should be sure that, should you pass on, there will be enough money coming to your survivors to provide for themselves in your absence (the amounts suggested vary, but somewhere from 5-20 times your annual income ought to do it). You might also want to get similar amounts in policies for the non-income provider of the family (or even children, although that is highly controversial), in case their passing prevents the main provider from working and, well, providing. You probably shouldn’t use a blog as the main source for life insurance advice, but this should give you a decent starting point. (I’m not going to get into the rest of your potential insurance needs, but you should have all the proper insurance you could need.)
6. Create a Will: I hate to tell you this, but at some point you will die. Hopefully, 2014 will not be the year that it happens (ideally, not 2015 either, but we’re getting ahead of ourselves), but you need to be prepared for when it happens, which means, in part, having a will. It doesn’t have to be an elaborate will, particularly if your financial situation is not that elaborate itself, but having a statement for what you want to happen to your possessions and money will be highly helpful when the time comes. While not technically something you’re going to do with your money (unless the unfortunate happens), it’s still something that should be a major part of your To-Do List.