Budgeting your money and trying to save while taking care of yourself and your family is hard for many people even in the best of times.
Now we have stepped into another year and along with 2023 comes the struggle to get back to a normal routine life. Maybe you overdid it with your Christmas shopping or ran up too much credit card debt. Whether you have endless debt you are trying to pay off, or perhaps you feel your pay scale will never be enough to create any sort of savings account, the following tactics and techniques will help you gain control of your money. Just know that you are not the only one who is struggling financially and that there are plenty of ways you can approach a solution to end your financial instability.
1. Educate Yourself
One answer to your personal finance problems is educating yourself. Books can help you gain the wisdom you need to assist you in learning to save money. Look for best-selling authors that will tell you all you need to know about budgeting and learning how to save. Authors such as Suzie Orman and Dave Ramsey are a great place to start. Educating yourself about finances is known as financial literacy.
- Financial literacy is the ability to understand and make use of a variety of financial skills.
- Financial literacy in the United States is declining at a time when citizens increasingly need to make thoughtful and informed decisions to avoid high levels of debt and have adequate income in retirement.
- Some of the basics of financial literacy and its practical application in everyday life include banking, budgeting, handling debt and credit, and investing.
The Money section of US News has this article with a list of 12 free online personal finance courses. It would behoove you to take at least one of these free courses to help you learn financial literacy and how to better handle your money.
2. Set Financial Goals
With any dream, the one of managing your personal finances better starts with a clear goal and a plan. Some of you may be into spreadsheets, while others are more comfortable simply writing down your goals with a pen and paper. Enlist all the goals that you want to achieve. Categorize them into two types; Long term & Short term. Now that you have a clear picture ahead of you, all you have to do is work for what you desire at each step of the way and save money accordingly.
3. Planning is the Key
If you do not plan for what comes ahead of you, you will likely mess things up for yourself. Mismanagement still plays the lead role behind a financial crisis. You will need to start saving money to keep your financial sanity intact, and you have to begin with a plan. Otherwise, you will lose track of everything.
Write down all your expenses and all your earnings. Plan a budget and come up with something that helps you save up a percentage of your income every month. Allocate a sum of money for every type of expenditure and make sure you do not cross that limit. And make sure to track your progress.
4. Cut Out Unnecessary Expenses
This is where most people have the hardest time, learning to cut down on unnecessary expenses, but it is also the most effective way to save. You must change your whole mindset when it comes to unnecessary expenses. Follow these simple steps:
- Stop purchasing things that you do not necessarily need. That’s the only way you’ll be saving money without much effort. If you are a habitual shopper, learn that you do not have to buy every single thing on sale. Learn to limit or completely eliminate the time you spend on shopping sites like Amazon.
- Try to save on utility & monthly billings. For example: try to lower electricity consumption.
- Reduce the unsteady expenses like on clothing, fast food, and dining out. Try to cook at home as much as possible.
- Get your groceries at a discount store.
5. Free Yourself From Debt
Whether it is a student loan, car loan, residential loan, or even high-interest credit card debt, your foremost move should be to pay them off. The key is to prioritize paying off the debts above all the other unnecessary or luxury expenses. Do your best to eliminate using your credit card except in dire emergencies. If you ever have to resort to taking out a loan as the only possible option for a specific scenario, always opt for one with a low-interest rate.
6. Pay Yourself First and Invest
This is one of the first mantras of good personal finance; pay yourself first. Most people pay all their bills and hope they have a little bit left over, but this should be the opposite of how you pay yourself first. No matter how small the amount, before you pay any bills put a small amount in your savings account and forget about having it if at all possible. Also, learn about investing so your money can grow faster. Investing your money in bonds, mutual funds, stocks, and real estate will up your game and help you to earn a little extra on the side. In the long term, these investments can benefit you a lot. A mere dollar in years can give you an extra 20.
7. Find a Passive Source of Income
Sometimes even after budgeting and saving money, you still end up in a loophole of always running out of cash, holding your insufficient income responsible for it. You might feel like you cannot figure out a solution for this. You ultimately think that you would never be able to get enough from your 9-5 job. And maybe you would not. So, it is about time you look out for passive ways of generating income. Think of any extra skill that might come in handy or a unique talent you have. Use it to your advantage. You could even start a business from whatever little you can invest and work hard to make it grow.
There are other ways to handle personal finance management besides the ones listed above, for example:
- Improving your job skills to acquire promotion results in an increased salary.
- Get insurance to help you fight any possible tragedy with ease.
- Start saving up for an emergency fund to help come with unexpected expenses.
- Put more into your retirement savings.
- Keep track of your money.
Just keep in mind that all it takes is the right strategy to manage your personal finance. If you adopt all the above-stated tips to your views on money and implement each step with care, you definitely are going to end up with a more promising financial outcome.
Sources:
- https://www.discover.com/online-banking/banking-topics/5-pronged-plan-to-get-finances-in-order/
- https://www.cnbc.com/2021/11/17/use-this-checklist-to-get-your-finances-in-order-before-2022.html
- https://www.fool.com/the-ascent/banks/articles/10-must-dos-get-your-personal-finances-in-order/
- https://www.investopedia.com/guide-to-financial-literacy-4800530
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