Many may not agree with the sayings,” money is everything” or “money can buy happiness”. We are not here to validate those statements, but money sure is more than just earning and spending. Like everything, money also needs maintenance and proper accounting.
You can find hundreds and thousands of tips for managing your finance but which one will work out for you remains unanswered. That sounds scary enough.
When investing in something long-term, always ask yourself if you can actually afford it. Calculate your spending and saving structure and then finally make that financial decision.
But what remains unsaid is how easy it can be to start keeping track of your personal finances.
Good finance management knowledge can come in handy. They can help keep a good credit score and also make your debt go away. One just needs basic math skills & some tips, and they are ready to start.
Let us dive into some tips which will help you learn the ABCs of managing your finance.
1. Understanding your spending pattern
The first and foremost thing a beginner without any finance management skills can do is track their spending.
One must know what they are spending and where to track their spending patterns.
One can be to track with the help of receipts, along with keeping records of your purchases in a notebook or laptop. You can analyze and find areas where you tend to overspend, and in addition, this can also help you to cut down on unnecessary expenditure.
The other way to keep track can be super simple- money management apps. They are a godsend. Apps like money view and Goodbudget can help you categorize your spending, check your account balances and provide monthly summaries of your expenditures.
Overall, keeping track helps to create awareness of your finances. Once you know your basics, let’s start with the next step, making a plan.
2. Planning a budget
Everybody has a way to unwind. But most of the time, it involves spending a lot of money. We tend to overspend on several leisure activities daily. For example, shopping, ordering takeout, buying makeup, and whatnot.
Tracking is just the first step. But making a plan comes second. Analyzing your areas of overspending does not make sense if no solution is found for them. And for that, you will need a plan.
Let us take a real-life example to make you understand this better. Betting and online casinos have become immensely popular and people are resorting to these sites for entertainment purposes. But whether you go to movies or place bets on e-casinos, everything requires you to spend money. When you enjoy it, you often end up splurging more than you intend. For instance, if it is your favorite Avengers movie you might indulge in the overpriced movie theatre popcorn, or if you win a bet, next round you might want to up the stakes, and so on. So, to keep a tab on your expenses on such leisure activities, we suggest that you make a budget to spend when playing in online casinos and stick to it. You can put a cap on your credit card or simply allocate something like $20 or $50 per week or bet only when your favorite team plays, and so on.
You can do a similar thing if you are a shopaholic and spend hundreds of dollars buying things that you don’t even need. Start small and be steady in implementing these changes and showing constraints.
3. Slowly Create Your Savings Structure
Another great idea to manage your finances is to make an emergency fund.
As you now know how to curate your budget and set realistic financial goals, it is equally important to put that knowledge into creating an emergency fund. Why it is so important is very simple- it can save you from many unforeseen financial crises and high-interest loans.
Slowly contributing to your savings can help to provide you security and peace of mind. In situations like losing a job or a medical emergency, you can use these savings without asking for money from anyone else.
It is one of the best financial tips for young adults. Starting young can help you make it a habit for your future working self.
4. Pay Off Expenses Regularly
Expenses are like small debts to pay off. They weigh over your head constantly. And sometimes, forgetting them can lead you to pay extra charges.
It is necessary to pay all your expenses on time as much as possible. To counter this, finance management is crucial. It can help you inculcate a habit of punctuality in addition to your financial management skills. And can also get rid of extra charges that come with paying late.
It is easily one of the best money management tips because it helps to prioritize your spending and make your budget structure stronger. It can also improve your loan paybacks by improving your credit scores leading to decreasing interest rates.
Several benefits in one go.
5. Gradually Removing Unnecessary Expenditure
One of the major sources of unnecessary spending is your credit card. People tend to use credit cards whenever they don’t have enough money on hand. They subscribe to different OTT platforms like Netflix, amazon prime, Hulu, and their credit card gets charged automatically every month.
While some of these subscriptions may be of regular use, try to cut down on what you don’t use by unsubscribing to them. So, there will be fewer bills to pay every month, as your credit card won’t be charged unnecessarily.
6. Start By Making an Easy Investment Strategy
From the above points, we learned how to manage your money and build the perfect savings structure. But now, it is equally important to think further.
Start by making use of your income to make more revenue. Savings can be the stepping stone, but investing in your future can be beneficial and done in many ways. For example, start by opening and contributing to your retirement account. Don’t rush into risky investments like stock markets.
Always analyze your budget, savings and then invest in what fits you best.
Making a habit takes time.
As they say, slow and steady wins the race. Apply the same while making use of these financial management tips. It is essential to incorporate these into your daily life as naturally as possible. Slowly these will make it a habit and help to stay true to this financial commitment you made.
Use the above tips for managing your finance in a sensible manner, which applies to your unique circumstances. Keep in mind that starting with the basics makes the foundation of any concept strong, and in this case, it is planning your budget.