Are you tired of being late on your bills all the time? Here are some smart money management strategies that will help you grow your savings account.
There’s a saying popular among businessmen that goes, “the art is not in making money, but in keeping it.” You’re probably wincing as you read this because for most folks, saving money has never been their forte.
Financial imprudence affects a good portion of Americans, which leaves many of us broke and indebted. Stuff like overspending, lack of saving, over-borrowing, and loan-defaulting are a few of these financially imprudent habits that are rife in the country. No wonder only 29 percent of Americans attest to being financially healthy.
Money management strategies go a long way in enhancing your financial situation and are just what you need to put your financial situation in order. These strategies include everything from saving, budgeting, and the likes.
Knowing them subconsciously doesn’t do much for our finances. To spend less, you need a solid financial plan that you follow strictly. Read on to learn more about some incredible money management strategies you should adapt soonest to improve your finances and the quality of your life
Solid Money Management Strategies for Financial Freedom
If you don’t have control over your money, then your money will control you. The new decade offers an opportune time to start a new financial journey, and here’s how you do it.
Examine Your Current Financial Situation
Do you cringe every time you check your bank account? If you do, then this piece is just for you.
The first step to an effective money management strategy is understanding your current finances. From there, you can proceed to make a good financial plan and implement it for financial prosperity.
Not to mean that money management strategies are only for people in the financial doldrums. Even if you’re a bit well off, you can use these strategies to grow your wealth.
Getting a financial planner isn’t a bad idea; however, financial planners don’t come cheap. Quite frankly, if you’re beginning your financial transformation, then you really don’t need them. All you need to know is check your weekly and monthly expenses, your income, and your account balance.
Doing so gives you a clear picture of your financial situation, which is just what you need to get started.
Understand Your Income and Expenses
You can only spend and save money when you have it. That’s why it’s so important to understand how much money you get so you can plan on how to manage it properly.
Most people’s primary source of income is employment, sometimes with a business on the side. Regardless of your case, you need to know how much money you get to plan your spending and your saving.
Once you clamp down on your income, you can move to your expenses. Your expenses vary from month to month, but you should firmly establish, on average, how much you spend on each item every month. Subtract your expenses from your income to understand your money influx, what goes out, and what’s left, if any.
Make a Budget
Once you note down your income and expenses, you have all the necessary information to make your budget. Budgeting is a proven way to take control of your money, and doing so is pretty straightforward.
When creating a budget, list down the things you really need. Do your best to avoid listing unnecessary items, but if you can’t help it, only have one or two of these unnecessary items in your shopping list. Making your budget is the easy part, but implementing it is where most people fail.
You need a lot of discipline and commitment to stick to your budget.
One way you can avoid spending too much is by doing your shopping online. That way, you can buy exactly what’s on your budget. In a physical store, you see lots of other items that you can’t help but drop them into your trolley.
Have Priorities and Goals for Your Finances
Set priorities for where you want to spend your money, and you’ll find out you have more money than you thought you did. If your word involves a lot of travel, it makes no sense spending hundreds of dollars on housekeeping every month. Instead, save your money and buy that fuel-efficient car you’ve always wanted.
Your priorities should align with your goals, so when you prioritize your finances, have your goals in mind. Having goals gives your strategies direction to keep you focused on your money management strategies.
Create an Emergency Fund
The prospect of living for the moment is exhilarating in concept, but in practice, it never ends well. That’s why smart people establish an emergency fund for unforeseen circumstances. Setting money aside for sticky fixes is essential for financial freedom.
How much you set aside depends on how much money you have left over after making your budget. As a rule of thumb, try putting aside 10% of your extra income for emergency purposes. In doing so, you’ll have more than enough for rainy days.
Clear All Your Debt
Debt gives most Americans sleepless nights, and if you’re in debt, you understand just how frustrating debts can be. The total consumer debt in the US is at a staggering $13.86 trillion as of the second quarter.
If you’re in debt, don’t despair, because it’s easy to get out of debt once you have a clear cut plan. Just make sure you do it fast because defaulting might have legal implications, and late payments will affect your credit score.
It’s good to know, how long do late payments affect credit score? Then you can have a plan with a time frame within a period that won’t affect your credit score.
Money Management Is Difficult but Not Impossible
Quite frankly, money management strategies aren’t too easy to implement, but with commitment and clear set goals, you can manage your money for financial prosperity.
If you can afford one, consider getting a financial planner to help in your financial organization. However, only do so once you try out managing your finances alone, and you fail.
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