We aren’t born knowing how to balance our books. It takes time, practice, and, often, plenty of mistakes. Even then, money management can be challenging. However, if you’re determined to take control of your finances and put yourself in a better position, take note of the following money tips. You can be back in the black in no time.
Rely on Professionals
A lack of know-how shouldn’t be a barrier to having control of your money and being in a strong financial position. Whether you want to upgrade to an easy online tax return process or understand where your money is going, relying on professionals can be a wise decision.
Tax return agents, accountants, financial advisors, and budgeting professionals can assist in providing advice, managing your tax obligations, and putting you on the path to financial recovery.
Create a Budget
If you frequently find yourself short of funds at the end of the working week, a budget is an excellent way to make money management far more straightforward. Write down how much you earn in a set payment period and compare it to the expenses you need to cover with that money.
You can then see how much you have left over. If it’s not enough to cover emergency expenses and a few luxuries, revisit your expenses and see if you can cut costs. Creating a budget is crucial for avoiding excessive credit card use and ensuring you can always tuck away some monthly savings.
Use Budgeting Apps
While there’s nothing wrong with using pen and paper to work out your finances, many people find budgeting apps far easier. These applications help optimize your spending and saving choices and can often sync with your credit card and bank accounts. They are designed to track spending, manage recurring bill payments, and monitor your monthly cash flow.
Some of the best budgeting apps cost money, but there are plenty of free options when you aren’t in a position to spend anything on digital tools.
Pay Less Interest on Debts
American households have about $16.5 trillion of debt as of January 2023. Generation X has the most, with an average of $140,643 each, followed closely by baby boomers at $97,290 and millennials at $87,448. The interest levels on debt can be crippling, but you’ll be pleased to know there are plenty of ways to pay less.
Focus on paying off the debts with the highest interest rates first, or consider consolidation. Debt consolidation involves combining all your debts into one and paying one payment with one interest rate instead of several.
Adopt a Budgeting Rule
If you typically find budgeting challenging, adopt an easy budgeting rule with simple calculations to follow. The 50/30/20 budgeting rule involves spending half of your income on needs, 30% on wants, and 20% on savings.
This means that if you earn $1,000 after tax per week, $500 would be spent on covering your expenses, $300 on things you want but don’t necessarily need, and $200 would go into a savings account for an unexpected expense or a luxury purchase. You might need to adjust the budgeting rule slightly if your costs make up more than half of your earnings.
Money management doesn’t have to be time-consuming or complicated. It can be straightforward if you use the right techniques and rely on trustworthy experts. If your money management skills are lacking, now might be the right time to take some of the actions above.
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