Money might not buy joy and happiness, but getting your personal finances in order will bring so much peace to your life. Money has a strong connection with the mindset. If you ask anyone who has paid off a significant debt, they’ll tell you feeling in control is everything.
Taking control over your finances means having the power to influence or direct your money into the direction you want. It won’t hurt if you take a minute, grab a pen, sit down, and think about what you want to achieve on a personal financial level. Then start taking steps, little by little.
Understand the Benefits
Once you feel like you are somehow controlling your finances, you can more easily develop a strategic financial plan and achievable goals. Needless to say that people who are financially successful are usually the ones who dedicate their time and energy to regular budgeting, in addition to managing and planning out their finances carefully. This requires a lot of discipline, but the results are worth it! It’s rare that we are schooled in the ways of money management and financial education, yet it’s imperative to financial success. In case you’re new to personal finance or merely searching for ways to expand your financial knowledge, there are many great resources to start with.
Inspect Your Status Quo
The first thing you have to do is understand your situation in detail. This exercise should focus mainly on the following two major categories:
- Your incomes
- The patterns of your expenditures
You can take a medium-term period as a reference, and then extrapolate for the sake of the experiment. Multiply the deficit by some months to see your probable indebtedness, or multiply your surplus to see how much money you will save in between.
Name Your Financial Goals
The next thing you should do is write a list of specific short-term, mid-term, and long-term financial goals. These should comprise what you want to achieve in your life and for which of them you need money.
Financial issues can affect many different areas of your life; setting goals is the first step to planning where your money will go. Whether it is traveling the world or retiring early, listing your goals affects how you will plan your finances.
Once you have summarized down your financial goals, you need to prioritize them. Prioritizing your financial goals ensures that you are paying attention to the ones that are of the utmost importance to you.
Invest Time in Your Financial Knowledge
Set aside 20 minutes a week towards reading about personal finance, according to your areas of interest. There’s no way you can learn everything about personal finance in one sitting. Reading about personal finance in small increments will make it easier to digest. Choose one topic per week; once you’ve read and got a thorough grasp of the subject, you can move on to something else.
Experiment Different Financial Strategies
There are available so many different systems and programs out there to help you budget your monthly income and expenses, but you won’t know what works best for you until you give a few a shot! It could be that great new website you heard about or a good old fashioned excel spreadsheet; only you know what works for you.
More Things You Can Do Today to Take Control of Your Financial Life
1. Stick to Your Budget
Your budget is one of the most important tools for achieving financial success. Creating a thorough budget is a plan that allows you to focus your money in a way to the achievement of your goals. A budget decides how and where you spend your money. Without a financial plan in place, you may spend your money on things that are less important to you than your long-term goals.
2. Stop Paying Full Price for Anything
You would be wondering how many deals are out there! For just about anything you buy on a day to day basis, you can likely find a coupon, promo code, or maybe an alternative option available. When you realize all the different ways you save money on your various purchases, you’ll be amazed at how quickly your savings will build!
3. Make Your Savings Automatic
The best way to save more money is to set up automatic deposits. Creating a budget will help you calculate how much money you can realistically put aside each month after paying all your bills and other expenses. From here, you can then set up a direct deposit to a savings account. This is a great way to spare yourself the temptation of spending your extra money, and if you absolutely need to use your savings, you can access it easily.
4. Invest Your Spare Change
Ok. Now you are in control of your money. Ask yourself what is next. It makes sense to save all your spare change in a container at home, and periodically deposit it to your bank account. Don’t neglect this piece of advice. In your case, every cent counts. Then why not go one step further and invest that spare change! There are some great investing apps that will allow you to start investing for as low as $5! You can make those extra coins go even farther than you thought!
5. Reduce Your Monthly Bills
Home expenses account for a large portion of your monthly spending. Therefore, one of the best places to look for some cost reduction opportunities is at home. You probably can’t do anything about certain fixed costs such as rent, but by becoming frugal and making some modifications to your lifestyle, you can significantly lower variable costs. Start by optimizing electricity, natural gas, and water usage. And then move on to other expenses, including cleaning supplies, light bulb replacements, and landscaping.
6. Setup Bill Reminders
If you want your money management efforts to stay on track, you need to avoid late fees on your bills. The good news is that the solution is easier than you think. Just set reminders on your phone and pay each bill as soon as its reminder pops up. It is important to not miss any payments, because even a single one late payment may negatively affect your credit score, but it doesn’t mean that loans are inaccessible to you. Bad credit personal loan can serve you as a helping hand in a critical situation.
7. Cancel Unwanted Subscriptions
While we’re on the topic of monthly payments, it’s worth mentioning that forgotten digital subscriptions could be quietly draining your wallet. List all your apps and cancel the ones you no longer use. Ironically, there are apps that help you manage these monthly subscriptions. For other services, consider whether you can switch to a cheaper alternative. For example, if you only watch TV on weekends, online streaming services like Hulu and Netflix are likely to save you hundreds of dollars.
8. Get a Cheaper Cell Phone Plan
Many people are overpaying for their cell phone service, and you might be one of them! Limit your background data usage, and opt for free messaging apps like WhatsApp so you can downgrade to a more appropriate plan. Also find out how can you make some money using your phone.
9. Stop Eating Out
We all enjoy having a nice meal at a nice restaurant, but eating out is an expensive habit that could keep you from reaching your financial goals. Instead of eating out or ordering takeout every day, consider spending time in the kitchen. Start by committing to one home-cooked meal every week and build from there. After a while, not only will you save lots of money, you’ll have much more energy and feel healthier.
10. Create a Monthly Meal Plan
In terms of food and cooking, if you want to take your money management skills to the next level, start making month-long meal plans. By deciding what you want to eat in advance, you can save both money and your time since you get to buy ingredients in bulk. Plus, you eliminate food waste and help save the planet in the process.
11. Shop with a Grocery List
There are many money managing tips about grocery shopping. For example, you can stave off the temptation to buy random items at the grocery store by taking your shopping list with you. This way, you won’t forget the things you need and avoid spending extra money.
12. Download Coupon Apps
Apps that offer deals for grocery stores can enhance your money management efforts. You can also earn cashback from your spending in grocery stores using rebate apps.
13. Shop at More Than One Grocery Store
Most of the time, grocery stores offer great deals on only a small number of items in their inventory. So, you’re likely to save more if you visit different locations and find the best deals.
14. Go on a Spending Fast
Basically, spending fast is when you stop spending money for a set period of time. The duration is arbitrary and varies from a few weeks to a few years! Of course, essential categories, including food, transportation, and bills, are not part of the challenge. So, in effect, you are committing to eliminating your expenditures on non-essential areas such as clothes and entertainment. Living this way for a few months could boost your progress towards financial freedom.
15. Invest in Things That Will Save You Money over Time
Some purchases should be seen as investments as opposed to expenditures because they will end up lowering your expenses in the long run. A reusable water bottle, rechargeable batteries, and LED light bulbs are just a few examples.
16. Pay off Your Debt
Being debt-free affords you the opportunity to take control of your finances with much more certainty. Since obligations roll over each month, you may end up with a huge pile of debt before you know it. So, the sooner you get rid of that debt, the better off you will be. Compile a list of all your debts and figure out the minimum amount of monthly repayments you should pay each month to stay afloat. Then try to find ways to pay extra. If you have multiple loans, use the extra money toward the one with the highest interest rate.
17. Manage Your Student Loans
Unlike most types of debt, there are ways to eliminate your student loan debt without parting with your money. There are several forgiveness programs you may qualify for. If you have no option but to repay your loan, your lender may lower your interest rate by around 0.25%, provided that you sign up for automatic payments.
18. Transfer a High-Interest Debt
If you find yourself with more credit card debt than you can handle, you should look for a deal to transfer your debt to a card with lower (preferably 0%) interest. This will help you pay off the debt faster because larger portions of your payments will go toward the principal balance rather than toward interest charges.
19. Negotiate with Your Credit Card Company
It may surprise you to know that, in most cases, credit card companies are willing to negotiate and better deals with lower interest rates if you ask for it. Most people assume their requests will be denied, so they continue paying high-interest rates for no good reason.
20. Try Using Only Cash
You may have noticed that credit cards are detrimental to your future financial independence, to say the least. So, no one will blame you if you decide to ditch them altogether. By switching to cash or debit cards, you’ll get better sticking to your budget and ultimately learn how to manage your money.
21. Start Saving Each Week
Saving is a habit that doesn’t come naturally to us humans. You must have a deliberate attitude towards saving. Open an interest-bearing savings account and make weekly deposits to it. In addition to saving the money you cut from your expenses, you should set aside a part of every paycheck (anywhere from 10 to 20 percent is fine). If you master this money management skill, it will benefit you throughout your life.
22. Start an Emergency Savings
Unfortunately, the unexpected does happen every once in a while, and you need to be prepared for when it does. An emergency fund serves as a financial backup for such situations. It’s a good idea to keep two separate funds: (1) a rainy-day fund which can help you cover small unexpected costs such as an unforeseen medical bill and (2) an emergency fund which can control finance problems for three to six months in case you can’t work for some time.
If an emergency arised at the moment your emergency fund is empty, cover you necessities by means of a fast loan.
23. Become an Investor
Building your wealth requires more than hard work and determination. You need to make your money work for you by investing in stocks, mutual funds, real estate, etc. Enroll in a class to learn the basics of investing and strive to create a diverse portfolio that minimizes risk.
24. Find Additional Sources of Income
You can apply all the managing money tips in the world, but as long as your income is limited, you won’t save much (any) money. Sticking to a budget is a great way to take control of your finances, but in order to achieve true stability, you need to have multiple streams of revenue. Look for opportunities to generate passive income or try to earn money by doing freelance work on the side.
25. Improve Your Job Skills
Your ability to find and maintain a high-paying steady job directly influences your finances. Therefore, you need to make sure that you have the necessary skills that make you attractive to prospective employers in your field.
26. Sell Your Old Stuff for Cash
Sometimes, especially during spring cleaning, you may come across items such as clothes or electronics that you no longer use or need, but that doesn’t mean they’re useless. Decide what you can sell and what would be better to donate.
27. Make the Most of Employee Benefits
Employee benefits are perks that companies give their employees in addition to their regular salaries. These benefits vary significantly from company to company. Nevertheless, popular options include health insurance, dental insurance, gym memberships, and telecommuting options. Carefully evaluate everything your employer offers to see if they can somewhat help you take control of your finances.
28. Increase Retirement Savings
You should look at your retirement as an expense for which you must prepare the way in advance – ideally as soon as you land your first job. Even a small increase in your savings can amount to huge savings over time.
29. Get Insured
Having insurance adds an extra layer of protection to your finances. There are insurance policies for almost anything imaginable; however, home insurance, car insurance, and health insurance are the most common types that you can consider. It can be tempting to go without coverage, but it’s best to think of insurance as a life jacket: when you need it, you’ll be grateful you have it.
Have you found yourself in a difficult situation without insurance? Don’t panic! Apply for an instant loan and resolve all the issues.
30. Create a Will
You may be surprised to see this tip in an article on how to manage personal finance, but having a will is a critical aspect of financial planning. The state gets to make decisions regarding your money should anything happen to you!
Take the First Step
It may seem difficult at first to start implementing these money management tips, but it’s entirely worth it. Once you get rolling with gaining control of your finances, the outcome is life-changing. You will not only achieve financial success and security, but you will also feel empowered about so many other areas of your life as well.