A lot of people feel overwhelmed when it comes to personal finances, but there are some management tips that can help you make, save and invest money.
When you think about your financial situation, you usually consider three aspects: how to make money, how to save money and how to invest money. Finding a balance between those three things can be frustrating, but there are certain things you can do to manage all of them and reach your financial freedom.
1- Maximize your income
You might have different career plans for the future, but you need to max out your current situation. First of all, compare your salary to other salaries for the same position in the same industry. If you are being underpaid, don’t be afraid to talk to your boss. Asking for a raise is always a source of anxiety, but if you are not being paid correctly, say something.
2- Diversify your income
We usually hear that the key to a healthy portfolio is diversification. When it comes to your income, it’s just about the same. Find side gigs you can do during your free time or during the weekends. Any side hustle will help you generate some extra money while you manage your work hours and your schedule. There are a lot of options out there for you to check out, from blogging to micro-gigs, online surveys and more.
3- Create a budget
Budgeting is one of the most important parts of money management. It’s the tool that will allow you to clearly see what you have, where that money is going and to detect rooms for improvement. You can create a thorough budget you can opt for something simpler like the 50/30/20 rule. Whichever option you decide, it is really important to have a budget that will allow to account for all your expenses.
4- Pay off your debt
Being in debt is stressful and it usually keeps us from making the most out of our money. A simple rule of thumb is to pay the one with higher interest rates first and leave the ones with lower interest rates for later. Not all debts are the same, for example, a credit card debt is one of the costliest around, so make sure you pay that one first.
5- Start investing early
First of all, invest in a retirement fund: if your employer a 401(k) with matching contribution, contribute at least as much as your employer. You can also opt for a traditional or Roth IRA account.
Additionally, you can invest in stocks, bonds and real estate as these are usually safe options in the long term.