What is the best way to manage your money for the coming year? With the economy looking so “iffy” in so many areas, setting a budget may be difficult, but even more important. For anyone looking to make a major investment, such as buying a house or car, the current low interest rates and the potential for that situation to change could make a big difference in whether it is the right time for you to buy.
The value of the dollar has crashed and it is weakening. Right now, low rates are causing more people to invest in home construction. The problem with that is that the future interest rates could go up and cause the payments to be unaffordable for those who were just covering their expenses at the current rates. In contrast, automobiles are expected to continue to grow less expensive each year. Coupled with lower fuel prices, this could be a good time to invest in your own car.
Long-term loans are low but unpredictable, making them a bigger risk for the future of your credit. At the same time, short-term and consolidation loans are still consistent with regards to interest rates and lending opportunities because they are not as likely to be impacted by an uncertain future.
Along with the predictions for finances for the coming year is the news that wages are either growing slowly or declining. This could lead to an increase in available jobs but at a lower wage to existing and new earners. As more people try to adapt to a tighter budget, short-term loans and consolidation loans are likely to become a necessity for more people who are trying to make ends meet with less money coming in.
To create a flexible budget for the year, a good place to start is by maintaining a minimum 5% deposit of your overall income into savings. The more you can prepare for any loss of income now, the better able you will be to adjust your budget to meet all of your needs later on. Any purchase that prevents you from being able to do this should be postponed if at all possible until the future is more secure.
A good way to budget necessities like food and clothing is to look at how much you spent on each area last year. If there are any major differences in the costs this year, adjust the budget accordingly. Once you have everything down on paper, you can determine how much more income you have coming in that you will need on the necessities. Remember, any financial commitment you make now that requires you to “buckle down” should be considered a big risk for your future. The end result of your efforts should be a comprehensive, working budget that you can easily follow.