When it comes to putting yourself in the best possible financial position and being in control of your personal finances, effective financial management is essential. Are you aware of your expenses? What about your credit score? Are you keeping track of your debt? These are all critical factors you need to be aware of in order to become a currency. […]
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April 7, 2021
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This story originally appeared on ValueWalk
When it comes to putting yourself in the best possible financial position and having your Personal finance under control, effective financial management is vital. Are you aware of your expenses? What about your credit score? Are you keeping track of your debt? These are all critical factors you need to be aware of in order to become a financial management superstar.
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While exceptional financial skills aren’t always necessary to manage your money better, there are a few tips we could all use to help us stay in control of our finances. To that end, here are our top four ways to effectively manage your money in 2021.
Step 1: budget better
Even if you don’t think a budget is necessary, or that it can be a tedious approach to managing your money, it’s incredibly useful. Knowing the source of your money, or where your money is coming from and where your money is being spent are two key elements in budgeting better.
To know where your money is going, for example, you need to check your spending. You will want to consider your essential expenses, like your bills and rent, and think about your “not-so-essential” expenses – like the money you spend on health care. Keeping track of these two factors is key to your budget, as is keeping it up to date with your spending. This way you will find it easier to keep track of your money.
Step 2: Look for discounts when possible
Spending what you can afford is key to better managing your money. This is where looking for discounts and paying the perfect price for services and products is ideal. Looking at for discounts on services and reduced prices or sales of the products you want to buy, you can reduce your expenses.
Coupons are also another way to take advantage of discounts. So, instead of throwing them away, you might want to keep your coupons to make sure you always pay the ideal price for your products.
We’re not saying you should never indulge yourself. But it’s essential to be careful when it comes to spending money you don’t have. Find different ways to indulge yourself and try to stop spending.
Step 3: Keep track of your responsibilities
Coming back to the importance of a good credit score, you’ll want to keep an eye on the number of loans you’ve taken out. The ideal way to do this is to go through all of your loans – your credit cards, car loans, and home loans, for example, and record your expenses on an Excel spreadsheet.
Keeping your monthly expenses low – in terms of loans – is important, especially if you can’t afford the monthly repayments. This is because even if your bank guaranteed loan approval in the first place, you might find it difficult to maintain the monthly repayments if you have other obligations.
Step 4: Save, Save, Save and Use a Savings Account
The last step in better managing your money is to save as much as possible. If you’ve got your eye on a flashy product, what’s the best way to buy it? Instead of buying with a credit card, for example, make sure you save up front and build up your money until you are sure you can afford it.
Ultimately, your vital expenses such as your bills, mortgage loans or rent are more important than a flashy product. No matter how much you want, it is always best to try to save as much as possible and buy that product when you have the money together.
How do savings accounts work? They play a key role and can strengthen your savings efforts in a number of ways. Not only can you make instant and automatic transfers between your checking account and your savings account, but you’ll also be able to monitor your savings, set how much you want to save each month, and make regular deposits.
Manage your money with ease: key points to remember
While managing money can seem like a challenge, you can make it easier to do this by:
- Create and stick to a budget
- Keep tabs on discounts, coupons and sales
- Stay on top of your spending and Liabilities, and
- Regularly put a percentage of your money in a savings account
With these key steps, you will soon become a money management professional and start seeing your money grow in no time.
