Money management can be a tricky subject to discuss, particularly for adults. But, it’s certainly not one you should simply brush under the table. If your goal for this year is to have more control over your expenses, money management is something you can learn. From small changes to big and significant measures, even the young professional who has just started earning can be the boss of their finances.
Whatever your reasons for taking this prudent approach of money management, there’s no time like the present but now. If there’s anything the past years have taught anyone, it’s that even those with stable jobs may one day lose it. You don’t need to be a millionaire to survive – you just have to be more mindful and responsible with your money.
With these four money management tips, you won’t just have a roof over your head, but you’ll also be able to secure your financial stability. Get the facts straight, right here.
1. Track Your Spending
This first tip can’t be emphasized hard enough. There’s no money management to speak of if you aren’t even tracking your expenses. It’s about creating an accountability system, where you know exactly where every cent of your money is going through.
Moreover, with a tracking system, you’ll be able to identify areas of your monthly expenses where you could be overspending. Being face-to-face with those figures can help your account for it, responsibly.
To start, here are some of the best ways you can track your spending:
- Check your account statements regularly, especially if you have some bills and transactions which you place on an auto-charge system;
- Use an expense or budget-tracking app;
- List all your regular monthly bills, including groceries, education expenses, insurance and mortgage payments, and even the amount you’ll allocate for savings.
2. Create A Comprehensive Budget
Keeping a budget for everything can help you avoid overspending. Remember that in finance, overspending is one of the top money-eaters. You may think you still have so much in your account, but after over-spending regularly, you’ll be surprised at how much your budget has actually dwindled.
The budget you have shouldn’t just be for the big things – like your monthly budget per se. Rather, it should be as detailed as having a budget for your groceries. How much will you allocate for that? Is it back-to-school season soon? If so, how much is your limit as to the school supplies that you’ll be buying for the kids? Even for your holidays, have a budget.
With that said, be sure to stick to your budget. It's not enough to have that dollar amount, yet still, be negligent in following it.
3. Build Your Savings
Even if you have a stable job at the moment, you never know when disaster may strike. It's always a good idea to have a savings account. Build it, little by little. On average, the minimum you should strive to have is at least six months’ worth of your salary in your savings account. This gives you enough leeway, in case you get unemployed, and have to find a new job.
No matter how small your paycheck may be, there’s always room to save. After tracking your expenses, perhaps you’ll come across points in your budget where you’re overspending. Do the math, and keep for your savings, what you can now determine to be unnecessary expenses.
4. Know What Your Priorities Are
Everyone has big financial goals or expenditures, especially as adults. Is buying a car within your five-year goal? Or perhaps putting out a mortgage on a home?
Before jumping right into those big financial moves, set your priorities. Are you sure that you can comfortably afford to pay for both the car loan and your house mortgage, without hurting your monthly budget and capacity to save? Or is it too ambitious at the moment? You have to be realistic too.
When you know what your priorities are, you can make better decisions about your big purchases. For example, say you need both the car and the house soon, as you’ve just gotten married. But, a five-bedroom house is just too expensive. Perhaps right now you can settle for the three-bedroom house. If you’re paying for any more than you can afford, you’re just setting yourself up for big financial trouble in the future.
With the tips above, you should now be better able to understand that money management is all about creating a plan for your money. That way, whatever amount you have as your inflow monthly, you’re able to make the most out of it. Remember that money management isn’t all about receiving a hefty amount.
It's more about making responsible financial decisions regarding what you do with the resources you have. With good money management, you’re able to keep your current and your future financial situation strong and stable.
If you want to keep on track with your money goals when buying or selling your home, let SimpleShowing help. Our low-commission model is designed to help you save on your transaction, giving you extra money to pocket away into savings or other investments. Contact us to learn more!