If you’re new to finances or haven’t thought about them until now, you’ll need to learn some money management skills. Without them, it’s hard to keep your finances under control and not fall into debt.
Money management doesn’t have to be hard. However, it does require some skills that you can easily learn. The hardest part – staying dedicated.
We have five money management tips that will help all beginners take control of their finances.
Set Up a Budget
A budget is one of the best ways to keep track of your money and stay on top of your finances. It’s hard to see where your money is going if you don’t make a note of it, and a mental note doesn’t count.
Your budget is a snapshot of your monthly income and expenses. To create one, start by adding up all of your monthly revenue sources. This will be your working number to divide into your expenses.
Start with your fixed expenses. These are the ones that stay the same every month (like rent or mortgage), and you have to pay. Whatever is left over, you then divide that amount between your variable expenses (groceries, entertainment, eating out for example).
By Mindful of Plastic
Using your credit card for every purchase is tempting. If you’re smart about it and have a point system, using only your credit card is doable.
For those who want to use their card to get loyalty points, ensure that you already have the money in your account. You’ll have to pay that purchase off at some point. It’s better to pay it right away than have interest charges on top of it.
Set Up a Savings Account
A common question is whether or not to save while you’re getting control of your finances and paying off debt. However, ask yourself this question – if a significant, unexpected expense occurred, would it through you into debt?
Having a savings account that is only there for emergencies is essential. You don’t need to contribute a lot every month. Starting small is a good place to start. Once you’re more comfortable, you can then start to increase your contributions.
Have a Goal
It’s always good to have a goal with your money. Those goals keep you focused and dedicated.
If you’re planning to buy a house, set a down payment target to work towards. Maybe there is a new vehicle you want to buy or a tropical vacation. Whatever your goal may be, it will help you keep your impulse spending under control.
It’s one thing to save money. However, if you can get it into an investment, not only are you saving, now you’re growing your account.
Before you begin, research investing so you’re comfortable enough to start. Use small amounts first as not to put you back into debt. Speak with a broker or investment expert to help you out.
Taking control of your finances and managing your budget doesn’t have to be difficult. If you find yourself in a situation where you need money fast, use a loan from a responsible lender. Make sure, though, that you budget for the monthly payments.