Managing your money is something everyone should take the time to do.
No matter if you are in a highly-paid job or are currently unemployed, a well thought out personal finance strategy can ensure that you keep track of your money and don’t begin to spend out of your means. This will help you to create and achieve financial goals you’ve been putting off, and aid you in saving money by reducing unnecessary spending. If this sounds good to you, read through our top tips on how to manage your money and improve your finances for good.
For anyone wanting to improve their financial situation, keeping track of how much you are spending and what that spending is going on is absolutely vital. Try downloading a money management app to see if there are any areas you could cut down your spending on, and how much of your money is going on luxuries you could cut back on. From there, you can work out a plan to improve your finances for good and start to build those savings up.
Take a good look at your regular spending habits compared to your pay, to work out a budget that will work for you. Try not to set unrealistic goals, instead make small changes that are sustainable over the long term and can start to make a real difference to your money. You can always make more changes as you go, so don’t start off with overwhelming changes that will make you scrap your whole money-saving plan.
A budget should be there to motivate you into better habits like cooking at home more regularly and spending less on nights out, so make your goals achievable and realistic.
Try to cut back on any recurring charges. Take a look through all of your regular subscriptions and work out if there are any hanging on that you don’t make good use of. Haven’t logged onto Netflix in 2 months? You probably don’t need to be spending money on it every month. Try to keep track of all your subscriptions so that you can identify which ones you are no longer using and change or unsubscribe.
Put together an emergency fund for those unexpected payments that come up in life from time to time. Even if you are contributing small amounts, doing so regularly can build up faster than you expect, and saves you from having to take out expensive loans or missing important payments like rent or bills.
Making contributions to a general savings account can also be a great way to improve your financial security and save for those big life moments, as well as extra money prepared for any unfortunate or unexpected events like unemployment or illness.
Some big purchases like houses or cars can be most easily achieved through the help of loans. However, for some other big purchases, the best option might be to buy in full, in cash. When you buy something outright rather than taking a loan, you avoid generating interest and getting yourself into debt which can hang over your head for years. Instead, save money in an account and only make big purchases when you know you can already afford to.
Even if you don’t currently have a big budget for investing, small, regular contributions to your savings and investment accounts can help you to generate even more income.
Strategies like an employer matching 401(k) can be so valuable, as they are basically donating your money for nothing.
Keeping a track of your bills and ensuring you pay them on time every month can be an easy way to keep your money under control. Doing so can help you to prioritize bills and essential spending, as well as help you avoid unnecessary late fees. Good credit card management, as well as regularly paying your bills on time and in full can also improve your credit score, improving potential interest rates.
One of the most important things to do if you are trying to effectively manage your money is to pay off your debts as soon as you’re able to. Start with those loans that have the highest interest rates like credit cards or store cards, then work your way down the list of debts until you are back on track. However, don’t forget to pay the minimum monthly premiums for any cards or regular payments you may be obligated to.
Managing your money effectively is so important. Make sure you have a fund ready for emergencies and pay all of your bills and debts on time and in full to improve your credit score. Keep track of your spending and set achievable goals to help to better manage your finances.
Felix is the founder of Society of Speed, an automotive journal covering the unique lifestyle of supercar owners. Alongside automotive journalism, Felix recently graduated from university with a finance degree and enjoys helping students and other young founders grow their projects.