Money is one of the things in life that people worry about the most. People complain that they never have enough and are always trying to make more, but managing our money is something that despite worrying about all the time, a lot of people are just no good at.
Being able to manage your money is one of the most important steps to live a debt-free life. Do you spend any time managing your money each week? Not stressing about it or dreaming of more, but actually making sense of it and understanding exactly where your money goes? Do you dedicate any time to looking at how much you are spending and own much you owe? It is strange that people spend so much time earning money but yet so little time learning more about it.
When you’re struggling financially, it can feel like there is no way out, but you need to remember that plenty of people have been where you have before, and there is a way out. You need to make some small changes and be strict with yourself, but if you follow these tips, you should soon be on your way to financial freedom rather than difficulty:
Live on Cash for Two Weeks
Debit and credit cards encourage many people to develop bad money habits, and they often confuse people about what they can afford to pay for and what they can afford payments on. When you’re using cash, it’s straight forward, you either have enough cash for it, or you don’t. The first thing you should do is to put all of your cards away for at least two weeks, and when you need to buy something, you’re only allowed to use cash. This will give you a good kickstart to realizing your spending habits and to get you on the straight and narrow.
Increase Your Spending Awareness
During the two weeks of just using cash, did you only buy things you needed? How much money did you have left at the end? According to studies, people spend as much as 15% more per purchase when they use plastic instead of cash. Did you find that you do this? Are you more careful with cash?
Work out Where Your Money Goes
Every payday there’s money in our bank account, but it never seems to last long enough, and you find yourself asking where it all went. After using cash for two weeks, try tracking your spending. Take note on pen and paper, use an excel spreadsheet, or get an app that connects to your bank account such as Mint or give Personal Capital a try which is free software which helps you to manage your entire financial life.
Create a Budget
Creating a monthly plan for your spending is one of the smartest things you can do for your finances, yet it’s the most overlooked solution to most people’s financial problems. Having a budget makes life so much easier because you’ve given yourself a guide to decide how you want to spend your money. You need to start by calculating your fixed expenses such as your mortgage or rent, bills, car payment, insurance – all the expenses you can’t easily control or reduce. Then calculate your variable expenses such as groceries, travel costs, phone bill, TV subscription, entertainment, clothes, holidays and morning coffees. These are expenses that you can either cut or reduce to help you.
Create a Plan to Pay off Your Debt
While it is often something that people like to ignore and pretend it doesn’t exist, dealing with debt sooner rather than later leaves you with a lot more options, so it’s better to face it. Many people feel embarrassed, and because of that they delay getting debt help, or in many cases, people just don’t know where to turn. If you need help dealing with your debts and finances, don’t be afraid to ask for help. Seek out professional, objective advice from a debt help organization; they can help you by having a second look at your budget and help you plan to deal with your debts. You could even speak to a debt settlement lawyer, check out
https://www.mccarthylawyer.com/ where you can find a free debt savings plan estimate.
Do you want to save for the holiday? Perhaps you want to save for a deposit on a house or buy a new car? Or you want to repay your student loan? Whatever your goals are, it’s important to identify them a goal but make sure that they are clear and achievable goals, there is no point in setting vague and unachievable goals. For example, a goal such as ‘I want to save $3,600 in 12 months for a holiday, so I need to save $300 per month ‘ is precise and makes sense rather than just saying ‘ I want to save some money to go on holiday.’ Clear and achievable goals put you in a much stronger position and become more manageable.
Pay Yourself First
Once you have decided on your goals and you know what you are working towards and you what your expenses are each month, now you should set aside the money you need to reach your goal first! As soon as you get paid, pay yourself first, move the money into a separate savings account and then forget about it.
Stick to Your Goals
Don’t bother spending time and effort making a plan if you’re not going to don’t stick to it? It’s important to review your spending on a regular basis, adjust your budget, and keep working toward your goals! If you have trouble sticking to your budget each month, then go back and analyze your spending again. Make sure those goals are realistic and are achievable, or you’ll feel like you’re failing each month, and no one likes that. It’s
One of the best things you can do to help you manage your money is to keep learning. Gaining life skills and educating yourself on how to manage money better and how to continue to develop your new money habits will help you to stay on track with your budget, help you to avoid financial problems in the future and help you to reach financial freedom.