One of the great ironies about wealth is that, for some people, more money is never quite enough. From those who struggle to pay rent, to millionaires who juggle speculative investments, anyone can feel a few dollars shy of true comfort. In reality, it often matters less how much you think you need, and more how you manage what you have.
When it comes to financial efforts — whether it’s saving for a major purchase, paying down debt, or simply living within your means — the trick is to create and stick to a plan. These four tips, if followed faithfully, will help you manage your money and provide more leeway in your approach to financial goals. 1. Set Goals and Create a BudgetGoals allow you to prioritize the truly important items on your financial outlook. Not all superfluous purchases occur at the mall; expensive entertainment subscriptions and restaurant meals also count, but many people simply accept these as normal expenses. Financial goals give you a reason to not spend money on unimportant things, and allow you to manage your finances more effectively. Write down and prioritize your goals, and organize them between short, medium, and long term. Short-term goals could occur within six months to a year, and can provide a framework for your budget. A budget marks significant progress in the management of personal finances. Once you know how much to set aside for expenses, you can utilize additional money management tips to make what remains go further. In order to create an effective budget, you must know what you spend on a daily, weekly, and monthly basis. “Your budget is perfectly useless if you don’t take time to properly record and track your expenses,” says Adrianna Abreu, a financial writer for Simple. “Make a habit of collecting receipts for everything you purchase. Don’t forget to account for items bought online and bills paid through automatic withdrawals.” Tracking your expenses will also reveal problem areas in your spending. To get started, make a record of every purchase over the course of a month. Ask for receipts and tally them at the end of each day, or keep notes on your phone. Chances are, you will identify at least a couple of areas where you consistently over-spend. 2. Use CashA further money management strategy utilizes some old-fashioned tech: cash money. Once you’ve figured out your necessary expenses, you can allocate discretionary income toward things like restaurant meals and entertainment. To avoid fudging your discretionary allowance — and throwing your budget out of whack — take the money out of your account once a month in cash. In addition to money management, you’ll find the use of cash can help manage the tedium of sticking to a budget. “To avoid budget burnout, withdraw cash to use toward discretionary purchases like coffee and movie tickets,” says Kendal Perez, savings expert with CouponSherpa.com. “Using cash to pay for fun means you’re still enjoying your money, but not sabotaging your goals.” Money reserved for discretionary spending allows for flexibility and fun. Unfortunately, it’s easy to lose sight of a budget when you simply put everything on a debit or credit card. If you find yourself consistently spending too much in certain categories, such as gas or groceries, you can use cash to help keep to your limits. If you worry about your ability to resist quick trips to the ATM, just leave your debit cards at home. 3. Automate EverythingSince it’s difficult to miss income that you never see, automated savings plans can become a boon for anyone who struggles to manage money. Most money troubles come from an inability to live within financial means; in other words, people spend more than they make. The only way to correct a negative savings rate is to dedicate income directly to savings. Again, return to your budget and identify some areas to make cuts. Once you find a number you’re comfortable with, set an automatic debit into a savings account for each pay period. You can start small, say $50 to $100 a month, and increase your savings gradually. If you get a raise, a good rule-of-thumb is to dedicate half the increased amount toward your savings. You’ll likely never notice the difference in your lifestyle, and will accumulate a nice nest egg as the months and years pass. If you struggle with forgetfulness, you can also automate many bills. An often overlooked money management skill, paying bills on time can save you both money and headaches. “Don’t just anticipate, automate,” says Chantay Bridges, financial coach and realtor with Truline Realty. “If you find yourself slipping, delayed, or hindered taking care of financial responsibilities, automatic bill pay will save you tons on late fees and higher interest costs.” 4. Prioritize Your DebtIf you have considerable debt, it can feel nearly impossible to manage your money effectively. Minimum payments and rising interest make it difficult to save money; without a savings, you must turn to credit for emergencies or unforeseen bills, thus worsening the debt situation. Throwing away money to interest does not represent effective money management. To avoid this, you’ll want to pay off your highest interest debt first, regardless of the actual balance compared to other debts. Once this occurs, you can move on to the next highest, and so on. To make the most of your efforts, contact your creditors and try to negotiate better terms. “You should always negotiate rates with credit card companies, or complete a balance transfer to find a credit card with an intro rate of zero percent,” says Sandy Young, founder of SY Financial Group. “Work towards paying off any high interest debts, then start saving and investing.” A few months of conscious effort will hopefully leave these money management tips permanently integrated into your behavior. As your debt decreases and your savings grows, you’ll see the positive proofs of your efforts. Though it can seem difficult at first, the establishment of good money habits will quickly transform saving into second nature. Have more questions? Contact us www.qualtiytradelines.com/contact-us
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