Money Management Tips to Bring Financial Success
As we move into the 2nd half of 2015, now is a great time to revisit your financial situation and plan for the second half of the year. Whether you’re a savvy saver or you’re trying to eliminate debt, these money management tips can help you build and improve your financial foundation. These tips will reinforce your good money habits and provide motivation to eliminate any bad habits that are keeping you from achieving financial freedom.
- Find your “why?” Why do you want to take control of your finances? Do you want to get out of debt, save more for retirement or help your children save for college? Whatever your reason is, turn it into a financial goal, and help your money start working for you.
- Review your financial accounts. Get an accurate picture of your financial situation by printing out the statements for each of your bank and credit accounts for the past 12 months. Highlight your fixed, irregular and discretionary expenses.
- Fixed Expenses: Mortgage/rent, utilities, etc.
- Irregular Expenses: Car or home maintenance, taxes, etc.
- Discretionary Expenses: Shopping, restaurants, entertainment, etc.
- Create a spending plan. A spending plan helps you spend your money purposefully, instead of scratching your head at the end of the month wondering where your money went.
- Track your expenses. Tracking your spending habits provides you with a real-time view of where your money is going.
- Eliminate debt. Getting rid of debt is a priority for many people, but the process can be intimidating. Be patient, and take it one debt at a time. For example, if your goal is to get rid of credit card debt, make larger payments on the card that has the highest interest rate while paying the minimum amount on the other cards. This will allow you to focus on paying off your debt one card at a time. Just remember to eliminate or limit your spending on each of your credit cards so you don’t reverse your progress. For more information on this process, check out our article on Eliminating Debt.
- Review your credit report. An annual review of your credit report helps you stay on top of what’s being reported to credit bureaus, allows you to fix incorrect information and alerts you to accounts that may have been opened fraudulently.
- Start an emergency fund. No one thinks about having an emergency fund until something happens. An emergency fund will help protect you from financial stress in the event of an emergency, such as a job loss, medical emergency, unforeseen car or home repairs, and more.
- Invest. Help your money work for you by making smart investments. There are many investment options available, so be sure to choose one that meets your needs and financial goals.
5 Reasons to Track Your Spending
Although tracking your spending may seem like a tedious task, it can help you take control of your finances. Tracking helps you to become more conscious of what you buy so that you can analyze your current habits and put better ones into place.
- You’ll answer the question, “Where did my money go?” Most people have asked themselves this question at one time or another. Keeping track of what you spend helps you to think twice about your purchases, especially the ones you make on a whim.
- You can use it to help you create your spending plan. If you want to save more money, but aren’t sure where to make cuts, track your spending for a month. Once you know what you’re spending your money on, you can reduce any non-essential spending.
- It’ll help you stick to your spending plan. Tracking your finances helps to ensure that you’ll stick to your plan.
- You’ll be able to save money to achieve your financial goals. Once you know where your money is going and have created a budget, you can channel more of your money toward larger savings goals, such as college, a down payment on a home, a new car or retirement. Even if you don’t have a larger savings goal in mind, tracking will help you keep more of what you earn.
- You may become more conscious about how to track your progress in other areas of your life. A funny thing happens when you begin tracking your finances—the consciousness you’re developing about your spending can trickle into other areas of your life, such as your health. And, the willpower you hone as you resist splurging on an unnecessary item may also help you to resist splurging on that extra cupcake or skimping on your workout.
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