The way you manage your personal finances may push you forward or set you back. To become more successful, start with adopting healthy money habits. They are no less important than eating a well-balanced diet and taking enough vitamin D.
In this article, we collected the best money management tips. They would work for people of all age groups, including college students, adults, and seniors.
Keep reading to see what you’ve been doing wrong and how to fix it.
The first step to eliminating your debt is to confront it. You should be aware of the amount you owe. It’s scary, but ignoring the problem will get you nowhere.
Make a list of people and institutions you owe money to. Credit cards, consumer loans, individuals ー everything counts.
Then, calculate how much you should pay monthly to avoid penalties. It’s essential to cover at least minimum payments. Ideally, you should be able to pay a bigger percentage: offering no more than the minimum payment keeps you in debt for years.
If your cash flow is not enough to cope with the debts, change the behaviors that put you in debt and think of the ways to make extra money. Tone down your lifestyle, cut the credit card, find a better-paid job or alternative income streams.
Many people are unaware of how much money they earn. It’s a big problem. To manage your cash flow efficiently, you need to know how big this flow is, where it originates, and where it goes to.
Sum up all the money you receive, including gigs, bonuses, dividends, ad revenues, trading profits, and other kinds of income, big and small. Don’t forget to take taxes out.
Now, you understand how much you earn. It’s time to see where this money goes.
Tracking spendings is important to understand if you manage your money wisely. Many of us avoid budgeting as we see it as restricting and stressful. After all, this procedure makes us face our overspendings and give up the things we enjoy, doesn’t it? Besides, budgeting goes hand in hand with boring paperwork everyone hates.
If you share this vision, you need an attitude shift. You track spendings to reduce money waste, and not to deprive yourself of life’s greatest pleasures. By plugging the leaks, you channel more money to where you really want them.
Speaking of calculations, there’s no need to use the pen-and-paper method anymore. Instead, take advantage of up-to-date budgeting software that offers a wealth of useful finance-tracking tools.
Today, there are tons of excellent money management apps for millenials. They make it easier to watch your investments, analyze your spending habits, and make smarter financial decisions. For example, some applications allow you to set weekly spending limits for different categories, automatically move extra funds to your emergency savings, or estimate the upcoming expenses.
The best apps are extremely user-friendly and have many settings to play with. It’s not always necessary to pay for premium add-ons, a free toolkit is often enough.
A lot of money slips through your fingers just because you have no idea what your life goals and priorities are. Without a big picture, you may waste a lot of funds on useless stuff.
Again, goal-setting doesn’t mean bartering little joys against a greater good in the future. On the contrary, it lets you understand what is important and focus on it.
It may be a bigger house, a first-class education for your kids, a world tour, your own business, or early retirement, you name it. Once you have your goals crystal-clear, mindless spending will reduce automatically.
Now that you know how much you earn and spend and what you’d like to achieve, it’s time to make a plan.
Making a plan means aligning your spendings with your goals and cutting out the stuff you don’t need. Say, if you are an ambitious designer, you may want to spend more money on a larger high-resolution monitor or best-in-class graphic software. Or, if you are a trader, you may want to invest in a faster laptop and an intensive trading course.
It’s up to you to decide what to cut out. You may save a lot of money by canceling or not prolonging subscriptions and memberships you never use, downgrading to economy-class flights, or using a train instead of a taxi.
Saving early in life has a lot of advantages. If your money has a lot of time for growing, you can enjoy the benefits of compound interest.
Start small. Make it a habit to put aside X dollars every month when you get your paycheck. Soon, you will be doing it automatically.
Another trick is to have a clear goal in mind (See No. 4). It’s not enough to make a wish list. Visualize your goal in detail, charge it with emotions, get immersed in it. Thus, you will get emotionally connected to your future.
Always have an emergency fund. It would be worth at least 4 months of your must-do expenses, including rent, food, utility bills, transportation costs, etc.
Many people don’t save for a rainy day: some say the rainy day is now, others rely on their credit card or easily accessible loans. But you are smarter than that.
Having an emergency fund keeps you calm. When you don’t have any savings, immediate survival becomes your top priority in a difficult situation. It leads to bad financial decisions that will cost you dear.
To start making an emergency fund, reconsider your budget and sacrifice some things you can do without. For instance, if you cannot travel right now, put this travel money aside instead of buying a new TV.
Find ways to pay less for the things you need or get them for free.
Today, we have a lot of saving opportunities we are not even aware of. Here are some wise tips:
As we know, inflation will eat away at your holdings over time, even if you deal with a relatively stable currency like the USD. So, don’t let all your money sit around in your savings account with its moderate interest rates. Instead, use a part of your funds to generate more money for you.
There are 2 ways you can make your “active money” work:
Olymp Trade, one of the recognized market leaders, offers an intuitive beginner-friendly interface, a rich collection of tools, and a wide variety of assets, including traditional and digital currencies.
If you still see money management as stressful and boring, it’s time to change the attitude.
Saving, budgeting, cutting expenses, planning purchases, investing, and trading can be really exciting and empowering. Just outsource complicated and time-consuming tasks to smart apps with a super-convenient customizable interface.
If you want to try trading, start with creating an account on Olymp Trade.