It’s the beginning of the year, which means it’s the perfect time to get your finances in order. No more putting things off and wasting money. If you want to manage your money effectively you need to dedicate a bit of time to organizing your finances.
It’s actually a lot easier and far less painful than you think, and how you manage your money can have a big impact on your life. Plus, over time, it can save you thousands. Once you get on top of things, it will feel as though a weight has been lifted off your shoulders. Here are some top tips on how to start managing your money.
Budgeting, we know, it sounds super boring, but it’s the key to a successful financial future. Before you do anything, define a weekly and monthly budget, and start sticking to it. There are loads of apps, like Mint, that can help you with setting up a budget, so there’s no excuse to avoid getting your budget sorted. If you prefer to write things down, then a good old fashioned pen and paper will do, or if you don’t want to use an app, a simple Excel spreadsheet will suffice.
Most people who have a budget say it gives them peace of mind over what they are spending. Without a budget, you could be spending way too much, and even splashing more cash than you actually earn, which isn’t a good idea. Those who budget are less likely to end up in debt, and more able to spot areas where savings can be made. In order to set a budget you will need to:
- Figure out how much you spend each month on absolutely everything including bills, travel, food and entertainment.
- Write down how much you earn each month, then take the amount you spend off of this, and you will be left with a remaining amount.
- You can then decide how much money you have left over at the end of the month to spend on other things, and how much you want to put into savings.
- If you are spending more than you should, you can figure out how to cut your monthly outgoings down. For example, do you really need to pay for that gym membership or have a phone that costs you 100 dollars a month?
- Make sure everyone in your household is on board with the budget you set, and that all members stick to the plan.
- It’s sensible to review your budget every three or four months.
Next up, saving. It’s so important to start saving as soon as you can. If you haven’t managed to yet, don’t stress about it. The sooner you begin saving the better, but it’s never too late to start. Once you have worked out your budget and calculated your monthly outgoings, you will be able to determine how much you can realistically save. If the prospect of saving seems daunting, and you don’t have much money left at the end of the month, start with realistic savings goals. If you smash your targets you can always gradually increase the amount you aim to save each month.
In order to motivate yourself to save, you need savings goals. And we’re not just talking about financial goals, but aspirations as to what you want to be able to buy in two, four, five or ten years’ time. Do you want a house, car or holiday? Visualizing what you want can really motivate you to save. Once you know how much you think you can save, it’s time to set up a savings account.
Finding the right bank account
Setting up a bank account these days isn’t too difficult, you can do it online or in store. The hard part is choosing the right bank, and bank account for you. There are so many, with a variety of features and perks, so it’s worth shopping around.
There are some banks that will charge you a monthly fee, and others that will expect you to pay a certain amount of money into your account each month. You can get recommendations from friends and family, but the most important thing to do is check exactly what every bank and bank account offers. For convenience, especially if you are monitoring your spending, use a bank that offers online banking, mobile access and free cash machine use.
Now you have some of the key money management processes under way, you can start thinking about smart spending. So, ways in which you can save money and shop savvy ways. Start thinking about every purchase you buy and researching where you can get deals and discounts. It’s easy to spend money without much thought, but if you can be a little smarter about what you spend, you could save loads!
Paying off outstanding debt
In order to manage your money, you have to tackle some of the tough challenges, like addressing any outstanding debt you have. You obviously can’t pay it all off at once, but you can make a plan. Decide which debts are costing you the most, and focus on paying these off first. Then work out how much of your monthly allowance can go towards paying off existing debts.
Investing your money
Now comes the fun part. Once you have got the hang of managing your money and saving your pennies, you can start investing your hard earned cash. It’s so satisfying seeing your money making you even more money! Just make sure you invest your money in the right places and do your research. You might want to start paying into a pension, or open a high interest savings account, or more fun learn day trading. Get great guidance and it’s not as hard as you think. Try trading alongside a professional in a live trading room.
Plan for your future
And lastly, you need to think about planning for your future. What money might you need in ten, twenty or thirty years’ time and how can you save enough between now and then? When you thinking about your saving goals, don’t just think about what you want now. Consider what you may want to spend your money on in the future, like going travelling after you retire, or buying a holiday home abroad.
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