How to manage money
5 money management tips
Do you want to learn how to manage money? Need some tips on how to start planning your finances? Learn the basic tips on how to to manage money and what you need to do in order to come to a good financial position.
Many people from time to time are faced with the fact that they have to make ends meet even if they have a good job. As a rule, the point is not even that an emergency happens to them that requires funding. Often people count pennies to paychecks because they don’t know how to plan a budget and manage their money.
For many people, money is confidence in the future. If a person has savings, he becomes calmer and more stress-resistant, as he understands that he can provide for himself even if an emergency occurs and he loses his job. Unfortunately, a quarter of all Americans are constantly concerned about money and do not have the savings to cope with an emergency.
Thus, money management is an essential skill that will help you feel confident, calm, and secure. Even if you have a small salary, but you skillfully plan a budget and manage money, you will never count a penny to paycheck.
How to manage money?
Of course, in order to learn financial literacy and money management, you must first have a plan and concrete steps to take. Many people do not know where to start, so they continue to live paycheck to paycheck. The fact that you are now reading this article is already the first step on the path to success.
1. Assess your financial situation
First of all, before taking any steps, you must soberly assess your financial situation at the moment. Take a piece of paper and a pencil and write down your income, your loan and credit card debts, and money you owe friends and family. Write everything down without hiding anything from yourself.
At this point, the most important thing is to be honest with yourself, because only recognizing the problem can it be solved. Sometimes the situation can seem frightening, but it is worth remembering that there is always a way out. Thus, analyzing your financial situation can help you understand where you are now and where you want to be.
Pay close attention to your income. The important thing for now is to write down all the sources of income you have. In addition to salaries, this can be pension, disability and other payments, part-time jobs, bonuses, and so on. Think of all the sources of income so that you know how much you earn per month.
2. Plan your money
The problem for most people is that they do not plan their funds, so they have no idea what they are spending it on. Without a plan, it is very easy to run out of funds in a short period of time. Thus, it is important to decide how much money should be spent on certain things.
If you spend a lot of money on unnecessary things to please yourself, then it’s time to give it up. If you’re spending money on clothing that you can do without, subscriptions or expensive delivery from restaurants and think that this is expressing love for yourself, then you are wrong. A person who loves himself knows how to say no to momentary weaknesses for the sake of a worthy future.
So it’s time to budget. First of all, it is necessary to include there vital things, such as rent, utility bills, food, and telephone and internet charges. After the basic things, include other important things in there, such as gasoline, clothes you really need, and other things that are useful to you.
3. Create an emergency fund
Many people like to complain about life when they have an emergency and they don’t have the money to deal with it. “Why did this happen to me? How am I supposed to find money now? ” – these are typical questions of people who have absolutely no control over their money. The fact that they cannot cover the emergency expenses is entirely their fault. You need to understand that difficult situations happen to everyone, but only people who plan their money and have an emergency fund can handle them without any problems.
However, how do you create an emergency fund? While monthly budget planning, add the mandatory item “emergency fund” there. Every time you receive a salary, immediately put aside at least 50, and preferably 500 dollars in the emergency fund and forget about this money. This will not affect your financial situation, but you will certainly thank yourself for this action when you are faced with an emergency situation.
4. Set financial goals
If you want to buy a new refrigerator, car or even a house after some time, a simple desire will not be enough. Many people take out a loan in order to make a particular purchase, pay a large amount as interest and often cannot repay the debt, which is why they find themselves in a debt trap. You don’t want this to happen to you, do you? However, in order to afford this or that purchase, you need to plan it and set yourself a specific goal.
Let’s say you want to buy a $ 1000 refrigerator, but you can’t afford it because you can barely make ends meet. In such a situation, you should include a “refrigerator” item in your monthly money planning and save money there as soon as you receive your salary. $100 is a small amount to set aside each month, and you won’t feel much pressure on your finances if you do it. However, $100 loan each month will very soon lead you to the desired result.
5. Don’t go into debt
The basic rule that every financially literate person should follow is to get out of debt. Of course, sometimes situations require you to borrow money for something extremely important (if your emergency fund is not enough), but this is rather an exception. It is important to get rid of debt in order to avoid unwanted problems.
Many people take out loans and end up in debt traps due to late fees and high interest rates. Other people borrow from friends and family, and if they cannot repay the money on time, the relationship can be ruined.
Do you have existing debts? You need to solve this problem in order to never return to it. Add a debt item to your monthly budget planning and pay back as much as you can. Of course, the more the better, as having no debt will help you get rid of stress and start raising money for what you really want.
If you are tempted to go into debt because you do not have enough money, find a part-time job. There are now a large number of part-time jobs on the Internet that will help you earn an extra couple of hundred dollars a month and avoid debts.
