Even though not many people are good at mastering their money, there’s no need to be an expert at finaces or investments to achieve it. These esay tips will help you save and spend money in a better way.
UNDERSTAND YOUR MONEY
1. Find your own way to learn personal finances
As any other thing you want to be able to handle, understanding money, requires knowledge. The first thing you need to do is read a lot about financial concepts. This may sound difficult, but luckily there is an enormous amount of books, podcasts or blogs that will help you learn how to improve and matain your financial health. Whether you are a single millenial woman, a working mom or a college student, there is a book or blog for you. You only need to find the right one and get started.
2. Check your credit score and improve it
To understand your overall financial health you need to check your credit score. Lenders, for example, will check this to know what your credit risk is, and whether you are credit worthy or not. A poor credit score can prevent you from borrowing money from traditional lenders or lead to higher interest rates. This is why it is important to check and be sure there is no innacurate information that can affect you negatively, find out if you have been a victim of identity theft, or find ways to improve your score if necessary.
3. Know Your Net Worth
Most people only pay attention to the money coming in and out of their bank every month. But that’s a really short-sighted way to look at your finances. Knowing your net worth is very important. To know this you must calculate: assets (what you own) – liabilities (what you owe)
• Any other things of value you own
• Student loan debt
• Credit card debt
• Any other money you owe
4. Set Financial Goals
It’s important to set long-term and short-term financial goals.This helps you to determine your priorities and what you should be doing with your money every month. Analyzing your priorities and understanding how you need to adminístrate your money to accomplish these goals is the first step towards creating your budget. Different goals may include a new home, a new car o putting money towards an emergency fund, for example.
5. Check Your Finances Regularly
Checking your finances regularly will help you understand your financial habits. Being aware of where your money goes to every month can help you see how much money you spend without realizing it. There may be months where you go overbudget, but it should be a concious decisión and you should be able to make up for it the next month when this happens.
MANAGE YOUR MONEY
1. Create a Budget
Creating a budget is the easiest way to start managing your money. Setting priorities and respecting a plan helps to not spend money on unnecessary things and therefore be able to save. Knowing where and how much you spend on household bills, education, medicare and other expenses makes it easier to start saving.
Wether you earn a lot or you don’t, you need to save money to be able to deal with emergencies and unbudgeted needs. Savings also minimize the need to borrow money and pay interest on credit cards. So analize your expense, et a budget that includes savings and emergency expenses, and stick to it no matter what.
2. Use the 50/20/30 Budget Method
Most people struggle with creating a monthly budget because they just aren’t sure what portion of their income should be destined to each part of their budget. The 50/20/30 budget may help you take some of the guesswork by creating a basic guideline which looks like this:
• 50% of your budget should go toward non-optional spendings like housing, household bills, education, , transportation, and food.
• 20% of your budget should go into savings
• 30% of your budget should go toward optional spendings such as entertainment, vacations, and shopping.
• This budget may or may not work for you, but it gives a general framework for how to break down your budget.
3. Use Online Budgeting Tools
Since we do almost everything online these days, it makes sense to take budgeting online as well. You can connect your bank and credit accounts to a third-party aggregator that tracks your finances for you. Some of the tools available include You Need a Budget, and Personal Capital.
These budgeting tools make it easy to stay on top of your finances because they track everything for you. You can set spending goals for yourself, and the tools can let you know if you’re going over budget. If you don’t like an online budgeting tool, you can put together a budget spreadsheet to track your finances.
4. Consolidate personal debt and credit cards
One way to extend your budget and reduce your expenses is to consolidate your current debt.
If you have several personal loans, medical bills, and/or multiple credit card balances, you should think of consolidating those unsecured debts into one loan. Having only one payment to do will make it easier to manage your debt.
Different ways of debt consolidation can be, for example:
• Taking out a debt consolidation loan and using the loaned funds to pay off the balances on your unsecured debt
• Transferring debt from high-interest loans and credit cards to a low-interest credit card
5. Pay Yourself First
Don’t wait for the end of the month to see how much money you are able to save. Instead of seeing how much is left over, (which some months may be nothing at all), saving should be included in your budget as a priority. You may set up an automatic transfer from your checking account to your savings account the day afetr you are ususally paid, and this way it becomes automatic.