Bad money management sounds nasty, so you will probably want to avoid it. However, a lot of people don’t manage their money well.
Having a good money management plan in place can often be the difference between living to your means and having spare cash at the end of the month. If you have several bank accounts, an IRA, credit cards, car finance, etc, it can sometimes be difficult to get a grip on your finances.
However, if you take the right steps such as the following seven, it should lead you to a good money management future:
The first thing you need to do is budget, and yes it may seem boring, but you ideally need to have one. It may seem tough however, it pays off in the long run. It’s the first step you will take into understanding the question ‘What is freedom from government control?’
Understand Your Expenses
If you ask most people to tell you how much they spend each month on absolutely everything, they may not be able to do so, and this isn’t uncommon. Many people don’t know the full amount of expenses that they use on a monthly basis. Track your expenses for a few months, this way you are able to gather an idea of how much you spend on average.
Look At Your Income
On the contrary, if you ask someone how much they earn on a monthly basis, although they may not tell you, they will know the exact figure. The main difference between income and expenditure is the fact that people are aware of one figure but not the other.
Consolidate Your Debt
Debt is something that most try to avoid but are likely in. No one likes debt or likes talking about it. Around eighty per cent of Americans are in some kind of debt. Where you can, try to consolidate your debt into more manageable payments. Where you can stick to your agreed payment cycle until it’s completely paid off.
Get Rid Of Unnecessary Expenses
Big fan of eating out for lunch or getting your morning coffee on your commute? You’re not alone, however, you may be surprised by how much this can all add up and how cutting back on this can be one of the easiest ways to cut back on unnecessary expenses.
Build An Emergency Fund
Bad things happen, so it’s good to be prepared. Having emergency funds is an important part of any healthy personal finance plan. The idea is to have a sum of money put to one side, that gets topped up monthly, but you don’t touch it until you really, really need to.
Review And Understand Your Credit Report
Your credit report is important, there is no getting away from that. It’s a number roughly between 150 and 900 that shows how well you manage your credit. It determines how creditworthy you are in the eyes of people like lenders, or landlords. Check our guide to repairing your credit if you need to increase your credit score.
Let us know in the comments below if you have any other tips that could help you be good with your money management.