How to manage your money better ?
I have often come across people in my life who have little monetary resources but they seem to be able to buy everything important in life without any financial stress and then I have also seen people who owned wealth beyond their wildest dreams and yet they ended up making wrong decisions and ended up debtors. So, how do we manage our money better? Well, that is the topic of today’s blog. Scroll below to find ways to not only manage your money, but also to invest it.
- There are many small tricks that one can use to manage one’s money. But to begin, one must first learn the basics of budgeting. If you want to get on top of your finances, a budget is a really good way to start. It’s just a record of money you have coming in and payments that you make. With most of us having access to smartphones, one way of doing this is to make use of budgeting apps. They will keep the track for us; all we have to do is enter our income and expenses without fail. Those who don’t use a smartphone can do the same with a spreadsheet or a diary. Keep record of what you spend and then see where you can cut the expenses. While budgeting, one must also remember to keep money for emergencies, vacations or a yearly payment that one tends to forget but has to spend on anyways. That will make for a reliable budget plan.
- Pay your monthly bills on time and avoid late charges. As simple as it may seem, this is one of the most neglected mistakes of budgeting. The late charges are an added expense and one that could be avoided in the first place.
- It is good to have a credit card but it is also mandatory to remember that it is not earned money but borrowed; hence, you have to repay it sometime. One should therefore use a credit card judiciously.
- Also, if you have loans or owe money on credit cards, it usually makes sense to pay off the debt that charges the highest rate of interest first – it’s the fastest way to clear your debts. And, if you’re focusing on paying down another debt, you must pay at least the minimum on any credit cards and your monthly required payments on any loan agreements to avoid breaking any terms of the agreement/conditions of the debts.
- Often, the hardest part of paying off your debts is taking the first step. It’s easy to feel overwhelmed if you know you’re struggling financially. But, the best way out is to face it outright and then plan to increase income or find ways to pay those off.
- If you’ve already missed credit card or loan payments or if you’re behind with so-called ‘priority debts’ such as your rent or mortgage, energy bills, property taxes, child support, or court fines, take advice from a debt advice agency right away. You will be glad you asked for help.
- One of the most frequent advices one gets about managing finances is to save, save and save. But hey, like Arman says, “Saving is boring, investing is interesting”. It is healthy to take risk once in a while and try to put the hard-earned money into reliable investments. I know people would say that’s too risky, but what is life without a risk? Plus, this one will help you increase your money…how does that hurt? However, before investing one must do all the research possible (including researching if the financial institution in question is legitimate or not and if there are any unknown charges or interest that they apply) and know the fine print so that it doesn’t come back to bite you. You might also want to check this beautiful wikiHow article on investing smartly. (Disclaimer: We are in no way connected to the authors of the wikiHow article and would not be responsible for any decisions taken based on the article).
- Take advantage of free money. If your employer offers a contribution match for retirement savings or heath savings accounts, be sure that you’re contributing enough to obtain the maximum match amount. Otherwise, you’re missing an opportunity for free money. Maximizing your contributions can also lower your taxable income and hence, investing your money thus is a smart solution. One can also chose to have a portion of one’s paycheck automatically transferred to a savings plan/investment plan. This is a great way of saving, because payments come out of their paycheck before it is cut and most people don’t even miss the amount invested.
- Have good insurance coverage. They say that smart people expect the unexpected, and have a plan for what they’ll do just in case. You never know when you’ll need a large sum of money during an emergency. Having good insurance coverage can certainly help tide you over through a crisis. Discuss with your family and insurance agent what kind of coverage is best suited for your needs.
- If you can borrow or rent, don’t buy. Lot of people spend considerable amount of money in buying CDs/books, etc. and then let it gather dust. It is much more economical to rent these. At the same time, if one needs a particular product frequently, then one should of course consider if it is a more intelligent and cost-effective option to buy the product instead of renting.
- If taking a loan, it is advisable to pay high down-payment (as much as possible) on your mortgage. That will ensure you minimize the interest payments and fees while balancing the rest of the budget.
- Sell what you don’t need. This may sound a bit extreme, but it is definitely an intelligent way to increase available money while also getting rid of the junk that we rarely/never use but still own. Let someone else enjoy those while they are still usable.
- Also, ensure to maintain a good credit score. It not only helps you in the long run but also ensures you get the lowest interest rates for loans if ever you need one.
Try these simple tricks and I assure you that being financially free and managing your money won’t be a far-fetched dream anymore! All the best.