Let’s face it. Many of us want instant gratification. However, when it comes to managing your personal finances, it can be difficult to stay on track when many financial management strategies require you to work overtime toward a larger goal. Without seeing any immediate progress, it can be hard to see if the strategies you have in place are actually working and even harder to stay motivated without seeing much progress.
The good news is that there are many financial management strategies that you can start implementing today to make progress toward your financial goals. Below are just 5 of the top financial management tips that you can use to get your finances in order:
Chances are that you have probably heard this before, but a budget is really one of the easiest free tools that you can use to take control of your spending and monitor how you use your money. Start by writing down all of your monthly bills such as rent and car payment to get an idea of how much you spend each month. After subtracting these monthly bills from your monthly salary, you can find out how much you have left to spend or save each month.
Creating a budget not only helps you get a better idea of what you spend each month, but it can also help you identify areas where you can cut back in order to pay down debt or save for the future. After monitoring your spending for a month using your online banking information or an app like Mint, determine where you can spend less. Are you eating out too frequently? Maybe you are spending too much on shoes? Creating and monitoring your budget allows you to gain greater control over your spending and develop healthier money management habits.
Unfortunately, the future is not certain. You may find yourself out of a job or running into a surprise emergency expense. Knowing that you have a Plan B to fall back on can help take off some of the pressure when you find yourself in a desperate financial situation. Rather than taking reactionary steps to handle your money problems, you can use your backup plan as a way to sustain yourself.
Whether your financial back-up plan is a part-time business or investments that supplement your income, it is helpful to have a backup plan to help you better manage your money when you run into surprise expenses or emergency situations. For instance, you might start a small online retail business or do some freelance work in your free time to help create additional income that can help in desperate times.
You are the only one who can control how your money is spent. Rather than being passive about your money management, you need to be proactive and take control of your financial situation. You tell your money what you want it to do. You decide whether to pay down your debt or take a vacation.
The first step to being proactive is to set some realistic financial goals that are reasonable, obtainable, and have a deadline. Then, you need to decide which steps you need to take to achieve these goals. Make a budget, decide which debts to pay off first, and determine how much you need to save each month to reach your savings goals.
Many young people may find it difficult to manage their money and achieve their financial goals using a traditional checking and savings account alone. That is because this method often doesn’t allow you to see the big picture or help you get a better understanding of your spending habits. Fortunately, there’s an app for that!
There are a variety of financial management apps designed for people from all financial backgrounds and money-management styles. Apps like You Need a Budget makes online budgeting easy and hassle free by providing users with a simple budgeting system that helps them gain better control of their finances. While apps like Mint provide budgeting and expense tracking that is comprehensive but a little more hands-off. You can also take advantage of coupon apps for local grocery stores and other retailers so that you can save money at the checkout, making it easier to stay within your allotted budget.
Though it may be tempting to dig yourself out of a financial hole by relying on credit cards or use credit cards to buy things you want now but can’t afford, you need to be careful with your credit. Maintaining a favorable credit score may not be at the top of your to-do list, but it will certainly be important later when you buy a house or car, apply for business loans, or seek personal financing.
Be mindful of your credit card interest rates and factoring your monthly payments into your budget so that you always make payments on time. Don’t spend more than you can reasonably pay back, and work to keep your spending under control so that you can avoid costly interest charges each month.
With these financial management resources, you can start working toward a brighter financial future today. Though financial independence and successful money management does take time as you learn to build new skills and develop effective money management habits, these tips will help you get started today and start seeing progress that will help motivate you to stay on track for years to come.