There are some great tried-and-tested strategies you can learn how to manage your money the right way.
If you have several bank accounts, credit cards, an IRA, and the like, oftentimes getting a grip and fully understanding your personal finance state might seem daunting and an uphill struggle. Here are 10 fundamental steps to help you manage your money the right way.
1. Create a budget
2. Control your expenses
The idea is to have all your expenses (both variable and fixed) accounted for to get a total amount. This will allow you to see the whole picture of expenses at the time and going forward. You will also want to compare your historical performance over time.
3. Understand your income
Most people know their full monthly income but have less knowledge of their full monthly expenses.
Nonetheless, the point is to figure out your total expenses and subtract that from your total income for the month in question.
If you end up with a positive number this is good (high five!) and means you spent less you made. You could increase your debt payments or increase your savings.
4. Consolidate your debt
The first thing you have to do is to get it under control and work on getting rid of it. If you have credit card debts, student loans, and other debts, you have to try to make the lowest interest rate possible.
If you only have a single credit card debt and are on a tight budget, try paying at least the minimum amount as soon as possible. Try keeping this payment cycle going until your debt is fully paid off.
5. Create an emergency fund
6. Save 10 to 15 percent for retirement
7. Review and understand your credit report
The credit report is very important to control your finance. That is a number roughly between 150 and 900 that serves as a score/grade which factors in your present and past loans, credit cards, mortgages, and any other reported debts.
It serves to determine how creditworthy you are and this score has a direct impact on your future borrowing ability. You have to understand your credit report to assure it has all your updated information and to identify any possible errors.
If you want to aim for a great credit score, keep your credit card balances low and work on paying off your debt instead of moving it from account to account.
8. Use personal finance apps
There are new and free tools out there that will show you ways to manage money as well as do all the hard budgeting and computational work. Many tools such as Quicken for Windows or the free MoneyStrands app will allow you to safely consolidate, manage and control your money all in one place.
You can easily get access to all your account balances, financial transactions, spending habits, and budgets, and take all that information to start making smarter decisions and achieve your financial goals.
9. Follow money management resources
Financial pros can give you some much-needed advice on how to manage your cash the right way. The key is when following them, carefully pay attention to what they say, absorb it, and only take the pieces of advice or guidance that can really help your case.
10. Remove unnecessary expenses
Have you spend too much money on luxury restaurants, bars, pubs...Maybe, just maybe, consider making your own blend at home to cut those pennies down?
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In short, stay well-informed, practice manage your finance. Being able to effectively manage your money will make your life much easier.