5 Ways to Manage Your Money Better
September 28, 2020
By Rahul Iyer
Money management is a subject that gets some people excited while it gets others a little deflated. Whether you find it as an interesting topic or not, it affects everybody. The way your money flows in and out must be clearly understood if you are trying to live a comfortable life. In this article, we will discuss 5 ways to better handle your finances.
Assess Your Current Financial Situation
Before you can make any other decisions with regards to the management of your funds, you must get a clear picture of your income and your expenses. This can be achieved by looking at your previous month’s financial activity. By looking at receipts, bank statements and considering your monthly obligations such as rent, debt payments and utilities, you can know how your money flows.
Develop a Budget and Commit to it
If you do not already have a budget in place, you should take the time to develop one. This is critically important for the proper management of your money. It may seem like a tough task to stick to a budget, but once you get going, you will see the incredible benefits that come from having a budget. Following a budget can help you to tackle debt more aggressively, and it can help you to be more strategic in saving and investing in an effort to achieve your major financial goals.
Create an Emergency Fund
Unexpected bills can completely throw off your finances. This is where an emergency fund becomes critical. If you have funds put aside and you are faced with an emergency, you will be in a position to cover the bill without having to sacrifice other critical components of your month’s expenditure. It is recommended that you establish a fund of three to six months of your basic expenditure. To do this, you can put aside 10% of your income each month.
Track Your Spending with A Tool
Using a tool or a personal finance app will help you to track your financial situation more efficiently. There are tools out there that are free or highly affordable that will be a major help to you as you seek to manage your funds. These tools will do all the complicated budgeting calculations for you and provide you with real-time reports that can help you as you make financial decisions.
Save for Retirement
Dedicate 10% to 15% of your income to saving for your retirement. Whether you opt for an IRA or your employer’s 401(k) plan, you should ensure that you are consistently contributing to a retirement savings account. It would be wise to establish a retirement savings target. This will help you to determine how much you need to be putting aside monthly.
These tips can help you to get your finances in a much better position than they are in right now. When you implement these measures and any other profitable personal finance management strategy, you will feel much more secure and progressive.