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Build a budget &
get a handle on debt

Getting a firm grip on your finances feels great, and it puts you one step closer to your savings and investing goals.

Create a budget and stick to it

A budget can help you have more control over your finances so you can save for your goals. First, know how much money you have coming in. When you look at your salary, remember to subtract your employer deductions for Social Security, taxes, 401(k) and flexible spending account allocations.
Next, divide your take-home pay into:
  • Fixed expenses like a mortgage, car payment and utilities, which stay the same each month
  • Variable expenses like entertainment, shopping and travel, which change from month to month
Keep track of your spending and at the end of each month, see how it stacks up against your budget. Make adjustments if your actual differs significantly from your original estimates.

Get a handle on debt

There's "good debt" and there's "bad debt." The interest on good debt, like a mortgage, is tax deductible; bad debt, like high-interest credit cards, can be a financial drain. These tips can help you tackle bad debt:
  • Know where you stand: Write down your debts, payoff amounts and interest rates. (A rule of thumb: Your total debt should be no more than 30% of your income.)

  • Prioritize payments: Focus on paying off debt with the highest interest rate first, and make at least the minimum payments on everything else. Consider consolidating debts with the highest interest rates to lower your rate.

  • Stop the cycle: Create an emergency savings account with at least six months of living expenses. When unplanned expenses surface, you'll have access to the money you need without upping your credit card balances or tapping into retirement savings.


Use banking basics that make saving simpler

Open a linked checking/savings account with a debit card—you'll get at-a-glance convenience for reviewing your finances, and the debit card can take the place of writing checks, paying with cash or using a credit card.
Set up direct deposit for your paycheck if your employer offers it, and put a portion of every paycheck into savings.
Used responsibly, credit cards can be a handy way to manage spending and help build your credit history. Look closely at interest rates and rewards to find the card that's best for you.
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You can keep tabs on your
spending and investments
Paying bills
online saves time

Go online to get the big picture

Online banking can help you keep your finances on track, especially if you consolidate your accounts.
You can keep tabs on your spending and investments so you always know where you stand. And paying bills online saves time, makes record keeping easier, and can help you avoid missing payments.
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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.