Very rarely do we worry about how we are spending money. Although money cannot buy you happiness, it can bring a sense of security. Without knowing how to manage your money, you may always feel like your life is one-step away from a financial cliff.
Financial planning is a skill that many develop over the course of their lives. In this post, we will help you find the best way to manage your money, so that you can focus your efforts and your money on the aspects of your life that really matter.
Getting into money management
Currently, on any platform you can find a large number of strategies, courses, steps and even instructions perfectly designed by financial experts, to learn how to manage your money. We will handle this issue more simply and easily.
We want to help you understand that having a financial planning, in which you can learn and maintain the management of your money, is of the utmost importance and of great help for your future. Having a money management plan can be the light at the end of the tunnel for people trying to get their financial life in order.
Learning the best ways to manage your money, it doesn’t had to be stressful. Nevertheless, if you don’t take the proper steps to get organized, you will feel like you are swimming against the current.
How to manage your money
When you are facing with a spending decision, especially a large purchase decision, do not just assume you can afford something. Confirm that you can actually afford it and that you have not already committed those funds to another expense.
That means using your budget and the balance in your checking and savings accounts to decide whether you can afford a purchase. Remember that just because the money is there does not mean you can make the purchase. You have also to consider the bills and expenses you will have to pay before your next payday.
Managing your money—like anything—takes time to understand and to improve on. Moreover, to master, it takes commitment and a solid understanding of your financial situation.
Yes, life is much easier when you have good financial skills. How you spend your money impacts your credit score and the amount of debt you end up carrying. If you are struggling with money management issues such a living paycheck to paycheck despite making more than enough money, then here are some tips to improve your financial habits.
Ten steps to initiate in money management and financial planning
1. Choose the right bank accounts
Choosing the bank accounts according to the necessary purposes is an essential step for anyone who is just starting out in financial planning. Therefore, our recommendation is that you correctly configure your checking, savings and investment accounts, in order to achieve success in managing your money.
2. Recognize your financial situation
You cannot improve your financial situation unless you take stock of it. It is rude, but necessary. You have to be brutally honest with yourself about your high expenses and any outstanding debt that are hurting your budget.
Our recommendation is to write everything down so that you can see a whole picture of your financial situation.
3. Make a plan for your money
Plan where and when you want to use your money. Think about your savings goals for the future, in addition to your everyday expenses; and on that basis, plan your expenses to avoid falling into temptations.
Without a plan for your money, it is extremely easy to find yourself so soon short on money. Let’s work on it!
4. Money goals
Setting money goals can be an attractive and motivational idea for the habit of managing and saving money. Our recommendation to you is to think about where you want to be financially. Once you have an answer to it, then you can make a clear and specific goals for your money and financial planning.
5. Keep your finances up-to-date
If you don’t know where are you stand, then you cannot make progress on your money management. It might sound unnecessary and annoying, but you only need five minutes to check in with your budget.
Trust us! This will help you to have a clear status of your money. Besides, you can use an app or a spreadsheet to determine, quickly, how you are doing your finances.
6. Plan your expenses
When starting to save money and understanding your finances, you have to look and review your spending. It is always a good move to remove completely or partially those unnecessary expenses. Even cutting a 20$ expenses out of your budget, can lead to a savings of 240$ for the year.
Therefore, do some “spring-cleaning” and slash expenses wherever you see an opportunity and especially if it is something that doesn’t affect your life to a great extent.
7. Understand your income
No matter how obvious it looks, it is important to take a look and understand exactly what you earn. Determine your net income after taxes, not just your gross income, and with that number make an accurate budget.
8. Limit your credit card purchases
Credit cards are a bad spender’s worst enemy. When you run out of cash, you simply turn to your credit cards without considering whether you can afford to pay the balance. Resist the urge to use your credit cards for purchases you can’t afford, especially on items you don’t really need.
9.Start paying down debt
In relation to previous point, debt is a huge financial burden. Not only does it affect your current budget, but also your savings for the future.
Please beware with your debts and try, to the best of your ability, to pay those debts in full. In this way, you can safeguard your savings and keep your finances safe.
10. Build an emergency fund
An emergency fund can be critical. Unfortunately, life throws large expenses your way when you least expect it. Typically, these emergency expenses are accompanied by unpleasant events such as a hospital visit or job loss. You never know when an emergency will appear in your life but you can prepare for it. Make it a priority to put money into your emergency fund with each paycheck.
Many experts recommend saving three to six months of expenses in your emergency fund. However, this will depend on your risk tolerance. If you would feel better with more saved, then you can add more to your emergency fund.
Set up a separate savings account to store your emergency fund. Otherwise, it is too easy to spend these funds.
When an emergency strikes, you won’t have to worry about the financial side of the equation. Instead, you can focus on the emergency at hand. You’ll thank yourself later for taking this step.
Get resources to manage your money
Every financial guru we know today started from the bottom by doing their saving in a Mason Jar. They just continuously learned and educated themselves and turned their passion into their profession.
Financial pros can give you some much-needed advice on how to manage your cash the right way, as well as some inspiring stories to get you focused on being the best version of yourself in terms of crushing it financially.
The key when researching which expert to follow is to carefully pay attention to what they say, absorb it, and only take the pieces of advice or guidance that can really help your case. Some of their financial jargon might be out of your league, so look more for those kernels of wisdom that might apply to you and yours.
Overall, stay well-informed, practice sound financial management, and perhaps one day you will be the next personal finance guru and have thousands, if not millions, of people sharing your content and seeking your expertise on the best way to manage your money. Anything is possible.
Being able to effectively manage your money will make life flow much more smoothly, not to mention help lower your stress levels. Being well-organized will also save you time and save you potential headaches in the future.
Take action and manage your money
Managing your finances does not need to be difficult but you do need to get started. Don’t allow your finances to get out of control before you start to manage them seriously. Small actions along the way can prevent a major financial disaster in the future.
Make the choice to start managing your finances effectively today. Implement each of these tips over time. Don’t let yourself get overwhelmed, just take it one step at a time.
Remember, you absolutely can effectively manage your finances. It will just take a little bit of time and effort to get your money under control.
Despite their good intentions, many people fall off the financial bandwagon. Sticking to a budget that’s too restrictive can be suffocating. Navigating investment jargon can be confusing. But don’t get discouraged.
You didn’t get to the financial position you’re in overnight, and you won’t get out of it overnight, either. Give yourself time to learn and grow. With hard work and dedication, you can manage your money with confidence.