Money is not the root of all evil; allowing it to control your life is. When people allow money to control their lives, as opposed to the other way around, they end up in desperate situations. Their overall debt continues to grow, their quality of life suffers, they resort to crime, and their mental health declines. Many of the problems functional adults face stem from poor money management skills. As opposed to ruling their money, they let their money rule them. Regardless of your financial predicament right now, the sooner you get a better handle on your finances, the sooner you’ll be able to accomplish financial goals such as retirement funds, college tuition for your children, a new car, and more.
1) Determine What Your Priorities Are
Everyone has financial goals and priorities. For some, it may be a new vehicle, for others, it may be exterior French doors. When it comes to managing money, you should align your goals with your money habits. By determining what your financial goals are, it will be easy to cut back on spending on things that do not help you meet that goal.
2) Monthly Income
There’s an old saying that goes something like “what gets measured, gets managed.” This is a term that can apply to all aspects of life. For instance, if diabetics aren’t able to measure their sugar levels, how can they manage it? The same can be said about your finances. If you don’t know the exact amount that you earn each month, how can you manage it?
3) Track Your Spending
Once you have an idea of what your monthly payment actually is, you’ll be in a better position to track your spending. Tracking your spending is relatively simple. Most experts recommend that you should track your spending over a period of one month to see where you can make adjustments such as eliminating nonessential expenses like a streaming service subscription.
Ideally, you should gather utility and housing bills, ATM withdrawal statements, electronic payment records, and credit card statements. Once you have done this, you can use a spreadsheet or pen and paper to list your total monthly expenses. Additionally, you should categorize your expenses such as to label purchases as wants or needs for example. Once you have an organized list of all your expenses, look through each category to see where a majority of your money goes. In some cases, you may be surprised at how much you spend on things like eating out or tobacco/alcohol usage.
4) Free Money
When the government started providing loans for businesses across the country as a result of the pandemic, they ran into a major issue where the businesses that really needed it weren’t able to get it because it got used up by large corporations. While many small business owners shy away from the possibility of getting free money as a result of pride, large corporations like the NBA didn’t have an issue swallowing as much money as they could. Never shy away from the possibility of taking free money. Primary examples on how to get free money include:
- Free health insurance from the state
- Putting more money into a 401(K) plan as to which your employer matches your contribution
- Food stamps
- Printable coupons
- Recycling bottles and cans you normally throw away
- Cashback sites
5) Emergency Fund
Regardless of what your financial goals are, you need to establish an emergency fund to take care of unforeseen things that could possibly occur. Most finance experts suggest that you should save at least three months of expenses. Meaning, if you spend $2000 a month on bills, you should establish an emergency fund of $6000. The reality of the fact is that in life, you really never know what may happen next. You may lose your job, you may get an illness that leaves you in bed for months, your home may get vandalized, or it may sustain weather damage. Life happens.
6) Save Often
The sooner you start saving, the sooner you’ll be able to accumulate interest. Many people assume you need an investment account to earn interest. This is false, some of the best savings accounts accumulate interest. The same principle applies to retirement, the sooner you start contributing to your 401(k) the better your retirement will be.
7) Personal Finance Course
One of the most effective things you can do to be the boss of your money is to take a personal finance course. A personal finance course can help you learn about savings accounts, investments, money management, budgeting, banking, insurance, estate planning, and retirement planning. Your personal finance skills dictate what kind of financial health you’ll have throughout the entirety of your life. Poor personal finance skills are one of the leading causes of debt and poverty. As such, one could reason that you can reach new heights by developing strong personal finance skills.
Author bio: I’m Jaylin: Guest post service planner of Leelija and full time blogger. Favourite things include my camera, traveling,caring my fitness, food and my fashion. Email id: email@example.com