Learning how to manage money may seem overwhelming, but it doesn’t have to be. Taking control of your finances is an empowering way to work toward financial security and reduce stress. Who wouldn’t want extra savings around to pay off debt, invest in the future, or spend on a new car or vacation? Check out the following tips for successful money management.
Set a goal and open a savings account
Saving money may seem challenging, but it’s often easier to get started after you’ve set a goal. If you don’t have one already, open a savings account. Add to it each month, increasing the amount whenever possible. A savings account is great motivation for long-term goals and can cover unexpected expenses.
Create a budget
To get your finances under control, first create a budget. This will help you keep track of what money you earn and spend. Sticking to a budget can prevent overspending that results in debt. Avoiding debt will help boost your credit rating, which will make it easier to get a mortgage or loans.
Start by writing down your expenses. Calculate how much you spend on household bills, car, home and health insurance, clothing and leisure activities. Either on paper, an online spreadsheet or even in a free budgeting app, list all expenses you can think of compared to your income.
Trimming your budget
If you have a budget but aren’t sticking to it, it’s time for reassessment. Start getting your finances back on track by taking reviewing your budget or bank statement to see where you can cut back. Jot down everything you buy in a month, and then decide what you can do differently. Prepare meals at home instead of takeout, drink office coffee instead of Starbucks, and cancel your unused gym membership.
Yes, it’s possible to reduce household bills
Household bills make up a huge part of our spending. While most expenses are unavoidable, some can be minimized. Think twice about whether you need such an expensive cable TV package or internet or phone deal. Get stricter with your water and electricity consumption. Use coupons or find a cheaper grocery store. Review your mortgage terms and see if you can find a new one with better rates.
Pay off credit cards and loans
If you have loans or credit card debt, pay off the debt with the highest interest rate first. Keep in mind that store cards tend to charge the highest interest rates. Meanwhile, personal bank loans tend to charge a lower interest rate than store and credit cards. If you’re trying to pay down a debt, continue to pay the minimum due on your credit card and the monthly required loan payments.
The Bottom Line
Managing your money will lead to extra cash in savings. You’ll soon have enough to start paying off debts and investing in your future financial security. Making and sticking to a budget will help achieve short- and long-term financial goals.