Financial tips: How to properly manage your finances

Photo by Emil Kalibradov on Unsplash

Are you failing to effectively manage your finances? If so, you’re not alone. Oftentimes, individuals aren’t aware of how best they can handle their money. From saving to investing, managing your personal finances is easier than most think. It just takes some proper education and the right mindset. Listed below are some financial tips to keep cash in your pocket in the long run.

Budgeting

Budgeting is a crucial first step. Whether you’re just starting out or have been making a budget for years, take another look at how you’re allocating your money. For one thing, ensure that the amount of money you’re spending on rent, food, and transportation each month is less than or equal to what you make. Furthermore, while budgeting is important to reflect your true financial state, it should also be flexible enough so that you can buy yourself a treat from time to time.

Saving

Believe it or not, saving money is essential for long-term security. In the personal finance world, there’s a saying: pay yourself first. By that, it means that you should save at least 10 percent of your income each month before doing anything else. However, if saving is not possible, try to pay off whatever debt you have in the shortest time possible. It’s important for one’s financial stability to be able to sleep soundly knowing there are no debts looming over your head.

Investing

If you’re looking for a way to boost your finances, investing may be the answer. Whether through a traditional company retirement account or putting an extra hundred dollars into your savings account each month, there are several types of investments that can help grow your money over time. For example, have some fun and take some risks by buying stocks. Or, opt for more secure investments like bonds or mutual funds.

Credit card debt

Unfortunately, credit card debt is fairly common in the United States today. But, it can take a toll on your finances and personal life. If you’re struggling with paying off your credit card, consider transferring over to one with 0 percent interest or at least one with a lower APR. Furthermore, stop using your credit card unless absolutely necessary.

Housing

Although you should put the majority of your income into saving or investing, it’s still important to have accommodations that are comfortable and affordable. That means spending no more than 30 percent of your monthly salary on rent or mortgage payments. If you currently live in an undesirable home, consider moving to a nicer neighborhood where you can afford more.

Car payments

Although it may be tough not to drive around in the nicest car on the block, forgoing that flashy sports car or SUV will allow you to save thousands of dollars over time. If you’re still making payments on your car, try to pay off that loan as soon as possible. Additionally, be sure to take into consideration the insurance and maintenance expenses that come with owning a vehicle.

Spending habits

For most people living in industrialized countries, spending can be a real problem. To avoid overspending on unnecessary items each, set a budget. If you’re not sure where to start, try using an app like Mint or check out Nimble if you are looking for reliable financial support. If you’re looking to make a change in your financial life, it’s important to look at how you spend your money. For example, if going out with friends on a regular basis is breaking the bank, try more affordable alternatives like cooking dinner at home or going for a hike. It’s also helpful to get rid of your credit cards if they’re not helping you out financially. Try using cash instead to limit what you spend each day.

Lifestyle choices

Photo by Emil Kalibradov on Unsplash

Sometimes, personal finance problems are not necessarily bad habits; it’s the lifestyle choices you make. For example, if you’re spending hundreds of dollars each month on your new hobby (e.g., scuba diving), consider scaling back on expenses like eating out or taking cabs when you could be walking instead. Additionally, if you’re not saving enough for retirement, try putting the money you save towards paying off your student loans.

Some financial experts believe that the key to wealth is having good credit, while others say it’s all about luck and opportunity. However, most agree that having good credit will help lower your interest costs when you’re applying for loans, receiving insurance rates, or even landing a job. 

Just because you have financial problems now doesn’t mean that you won’t be able to improve your situation. If you’re struggling to manage your money, consider speaking with a credit counselor or cut down on your spending. Invest in a small business, make a fixed deposit at a bank with favorable interest rates or find multiple streams of income. Financial stability is very important and hopefully, the above tips will help you set up an action plan on how to get back on track financially.