With the cost of living increasing exponentially worldwide, it’s now more important than ever to manage your money correctly. Thankfully, there are loads of easy, realistic ways to keep on top of your finances. In this article, we’re discussing the best money management strategies to help you manage your finance in a better way.
7 Money Management Strategies to Improve Your Finances:
1. Watch Your Spending
Do you know where your money goes each month? If not, you should!
The first step towards good money management is being aware of your spending. Using a money management app, you’ll see how much you spend on food and drink, subscriptions, and everything else.
Another way you can watch your spending is to use a comparison site. Comparison sites can help you find the best insurance, mortgage, or even educate you on aspects of life such as this insightful study on financial savviness. Use them when your insurance is up for renewal to get the best price.
2. Set a Budget
Now that you’ve got a sense of your monthly spending habits, use your monthly salary to create a reasonable budget you’ll be able to stick to.
Say you grab a morning Starbucks on the way to work every day, or you look forward to picking up a donut every Friday. Sure, making your coffee could be a more financially prudent thing to do.
Indeed, it’s a good idea to look into ways you can save around the home. But if these are things you will keep doing, there’s no point leaving them out of your budget. Instead, you should put together a budget that reflects your current lifestyle.
This way, since your budget is realistic, you have a realistic chance at meeting it, too.
3. Pay Your Bills on Time
Paying your bills on time is an essential habit for wise money management.
Not only does paying bills on time help boost your credit score and prioritize spending on the essentials, but it also improves your interest rates and means you avoid those pesky late fees.
Making sure your bills get paid on time could also boost your mental health.
If you’re having trouble remembering to pay your bills on time, try signing up for autopay. Whether it’s your phone, car loan, or mortgage provider, most utility providers typically give you the option of automatically taking the amount you owe from your bank account. So, make things easy and go automatic!
If this isn’t an option, try online payments or scheduling a bill-paying time. Log in and pay those bills every Saturday morning. Your banking app may remind you, or you could put a reminder in your calendar.
If you get different services from the same provider – phone, TV, and internet, for example – yet struggle to remember which day each bill is due, why not consolidate all these bills into one monthly statement?
This way, you’ve got one (or two) fewer things to remember. You could even change the dates of your other bills to this date as well or just pay them early.
Be sure to leave your paper bills in a prominent yet safe place, like a wall organizer or ring binder. Or, if you get your bills by email, add that address to your contacts and mark them as a priority or of high importance.
4. Keep Saving
Saving is tough. Sometimes, there simply isn’t anything left at the end of the month to put into the pot. But you should still set aside what you can, however small. After all, the alternative is to borrow money at sky-high interest rates or get stuck in the cycle of unpaid bills. So, creating an emergency fund is vital.
Another good way to save is to make general savings contributions. These contributions will fortify your financial security in the unfortunate event of job loss. Using automatic contributions will help you grow this fund and strengthen the habit of saving.
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5. Use Cash for Big Purchases
These days, certain types of loans and other financial products are the way to go when you make particular large purchases. For example, everyone needs a mortgage for their house, and car loans are convenient too. But using cash, when you can, is the cheapest and safest payment option.
Why cash? Well, not only do you get an interest-free payment option, but you also avoid forming a long-term debt that takes several years to pay back.
On top of this, the money you save can then rest in a bank account, accumulating interest that you can also use towards your purchase.
6. Cancel Those Subscriptions
We’ve all set up a subscription for a service we don’t use. Whether it’s a phone contract, a streaming service, or that gym subscription, it’s easy to forget about that recurring charge.
It’s effortless to forget about a subscription to one of the many digital services! Maybe you forgot the password or signed up for a trial. Often, you forget about it until the product or a letter arrives on your doorstep, and you forget to cancel it again.
So, cancel these subscriptions and save more. If you really don’t know where you opened a subscription, you could use an app to find them.
You can also just cancel the charge through your bank. However, it is always best to cancel your subscription by getting in touch with the service provider. This checklist will offer some inspiration on money-saving tips through subscription cancellations.
7. Look Into Investing
When people think of investing, they typically think of sinking large sums of money into shares. While this is one investment option, these days, even the smallest investment contributions can go a long way in generating extra income for you.
Did you know your employer may be able to help you invest? Or you could look into cryptocurrency.
Other investment options include cash investments, fixed income investments, managed funds, exchanged traded funds, investment bonds, etc.
Some of these financial management strategies will be more complicated to follow than others. But, if you just stick to a few good habits, you’ll develop finance-managing skills that will keep you in stride for the rest of your life.