Increasing Your Income

If you're living paycheck to paycheck, there are steps you can take to make your money work for you a little more. Stephanie AuWerter, Editor of SmartMoney.com, has some tips.

Once you've paid everyone else and your bills are in the mail, be sure to pay yourself. In other words, you need to save. "You need to make your savings strategy automatic," says AuWerter. Have money automatically deducted from your checking account or paycheck each month and moved into a brokerage account. You want to save at least fifty dollars, but if you can afford to do more, then go for it.

Also, consider switching your current savings account to a higher yield savings account. "There is just no reason to have your cash sitting in a checking account right now earning zero percent," says AuWerter. Most banks now offer higher yield savings accounts; ask your bank about their options. If your bank doesn't offer one, look online. There are several organizations out there who offer these types of savings plans, often with no minimum balance.

While your savings is growing, try shrinking your own interest rates. To do so, you'll need to increase your credit score. An individual with a high credit score can save hundreds - even thousands - of dollars each year in interest. In addition to paying your bills on time and trying to pay down debt, take a look at your credit utilization rate. "On your credit cards, it's the percentage of the available credit line that you're using," says AuWerter.

So, if your credit limit on a card is $5,000.00, it helps your credit score if you're only using $1,000.00 of that limit instead of $4,000.00. Ideally, AuWerter says you want to keep the percentage at 50% or below. If you're trying to pay down your debt but want to give your credit score a little boost, try asking your credit card company to increase your credit line. "Don't do this if you're just going to rack up more debt," says AuWerter. Remember - the goal is to lower your debt and increase your credit score, not the opposite. Know your credit score and do what you can to improve it. Once you've raised your score, you can then negotiate with lenders for a lower interest rate.

The money you'll be saving shouldn't just be stashed away for a rainy day; You need to think about retirement too. If your company offers a 401k plan or a similar retirement savings plan, be sure to sign up if you're not already enrolled. From there, it's important to contribute enough money to get the maximum company match. "This is free money!" says AuWerter. "You're not going to find a better deal anywhere else in the investment world." Like it or not, there will come a day when you'll have to retire, and every dollar will count.

Until then, do your best to get a raise. While this sounds easier than it really is, especially with a recession looming, now is the time to really put in some extra effort at work and become a key team player. If you're already doing your best - and then some - ask to be rewarded accordingly. "I think that lots of times, even if you really deserve a raise, unless you ask for it, an employer is probably not going to come to you with extra money," says AuWerter. To keep up with inflation, a typical raise needs to be around three percent. If you can get 5% to 10%, however, consider yourself handsomely rewarded.

For more information on making your money work for you, as well as other personal financial advice, click here to visit SmartMoney.com.








By Erin Petrun
  • CBSNews

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