5 Ways To Manage Money Wisely
When it comes to managing your money wisely and creating a budget, it is important to understand where and how you’re spending your money. With good money management you may be able to increase the money you have in savings and move closer to reaching your financial goals. These five tips will help you start managing your money wisely and give you a better picture of your overall financial health.
- Pay yourself first.
Paying your bills on time is essential when managing your finances, everyone already knows this, but what about paying yourself? People who consider their monthly mortgage equally as important as their savings are more effective at building savings accounts and this is crucial for meeting short-term and long-term goals. You’d be surprised at how easy it is to live on less when you’ve put more aside for savings, especially if you’re already on a tight budget. What’s out of sight is out of mind, so it’s important to pay yourself first after figuring out a realistic amount to allocate for savings.
- Establish an emergency fund.
One in four Americans claim to have more credit card debt than savings. When it comes to finances, you never know when an emergency is going to happen so you should always be prepared by having an emergency fund. Doing so will save you (some of) the additional stress and provide you with peace of mind in case of a job loss, health issue, auto repair or other unpredictable situations or expenses. These funds should only be used for emergency circumstances that can’t be planned for. If and when an emergency takes place, these funds will allow you to be on the road to recovery without the speed bumps of financial hardship.
- Reduce monthly expenses.
Review recurring charges, including those that are on autopay, to determine if those expenses are still necessary in your life. While traditional bills such as mortgage and utilities still need to be paid, subscriptions like magazines, streaming services and subscription boxes can likely be canceled if they aren’t used anymore. This can lead to big savings and more money in your pocket. Also make sure to check automatic charges regularly to catch any billing mistakes so they can be resolved in a timely manner. You may also want to think about lowering necessary expenses such as insurance policies, phone plans and even mortgage payments can sometimes be lowered to offer budgetary relief. Just by comparing auto insurance policy rates you can save an average of $360 a year.
- Rebalance your budget for the holidays.
Even if your income hasn’t changed, the upcoming holiday season full of travel and gift-giving is a sign it’s time to review and balance your budget. This will help you make sure you’re still on track to meeting your short-term and long-term financial goals as you look towards the new year. If you don’t already have a budget, start by reviewing the last two or three months of expenses to establish a baseline. From there, look for areas where you can cut back your spending, such as eating out or by canceling or pausing any unnecessary subscriptions or memberships. Use the additional money you saved to pay for any travel or gift expenses you may encounter during the holiday season.
- Build your savings.
Even though you’ll be spending money throughout the holidays, establishing small budgetary changes into your day-to-day life can create a habit that will help you with saving more money. Creating a habit of saving now will help you become a better saver even after the holidays are over.