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Tips for improving financial health in Washington, D.C.

The 2012 Financial Literacy survey reveals some upsetting information regarding Americans’ knowledge about their own monetary wellbeing. For example, just a little more than two in five people develop a budget and keep an eye on their expenses. Additionally, more than 77 million people in Washington, D.C., and across the country fail to pay their bills on time.

Taking control of finances can give consumers peace of mind and pave the way for a better financial future. One of the first tasks anyone with expenses should do is to develop a budget. This should track both income and expenditures. Without a plan in place, it can become easy to lose sight of where someone stands financially, leading to missed bills, overdrafts and unnecessary fees or penalties.

Part of the budget-planning process should take into account savings. According to Bankrate.com, saving for retirement is a must, especially if an employee’s company offers a match. Bankrate.com suggests putting at least 7 percent of an income into an IRA or 401(k), increasing the amount to eventually reaching 15 percent. Generally, people should always commit as much as the company will match, if possible.

Aside from long-term savings, short-term cash is an essential part of maintaining good financial health. Looking for ways to save money every day is a good place to start. Instead of buying an expensive coffee every morning, people can tuck those few extra dollars into a piggy bank.  

Lastly, anyone with debt should address those bills immediately. Paying off debt will lead to an improved credit score, which is a key part of buying a home or a car, or securing a loan. All bills should be paid on time and in full in order to remain in good standing. Paying down debt is often preferable to storing extra money in savings. A financial professional can help people determine where and how to divert money in order to maintain optimal financial status.

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