6 Tips for Managing Your Money Better
Whether your dream is to do what you love or become a millionaire (or maybe both), one thing is inevitable – you will have to manage your money wisely.
Our world is full of so many distractions, options, and credit that it can be hard to avoid heading down the wrong path of debt, poor investments, and bad decisions.
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It doesn’t matter if you make minimum wage or six figures, your wealth will be determined by how you manage your money, not how much you make.
It is crucial to make wise decisions if you want to meet all of your goals. To get started, follow these 6 tips for managing your money better.
1. Make a plan and start it now.
The most important step in any endeavor is the first one. This certainly holds true with money management, which is why the absolute most important tip is to start properly managing your money immediately.
It is impossible to start too soon. Formulate a plan and set goals for yourself. Do you want to retire young? Pay for your child’s college tuition?
Or just have a strong security net? Once you have figured out what your end goal is, set milestones so you know how much you need to save, pay off, or invest by a certain date.
2. Create a budget.
Once you have set goals, it will become clear how much money you need to be able to set aside.
This is when the next tip comes in: proper budgeting.
By creating a budget, you will ensure that you don’t over spend in certain areas.
This process can also be eye opening as you may be surprised by how much money you spend in a certain category.
Expenses like food, alcohol, or shopping can many times grow out of hand without realizing it.
3. Cut unnecessary expenses.
Creating a detailed budget may uncover expenses that you forgot you even had or ones that really aren’t necessary.
Try and cut out any of these expenses that you really don’t need.
Recurring credit card charges make it really easy to sign up for services and forget about them. Do you really need the premium Netflix account?
A Starbucks latte every single day? You would be surprised how much money you can save by cutting out these type of expenses.
In many cases the figure will grow into the thousands.
4. Pay off bad debt.
Any form of debt can make managing your money hard. Not only do you have to commit to paying a bill each month, but many times a large portion of that bill goes towards paying off interest.
On top of that, some debt is much worse than others. The greatest example of bad debt is in the form of credit cards.
The interest rate on most credit cards is extremely exorbitant (in some cases as high as 20%) and more often than not, the charges were not a necessary expense.
Identify your highest interest loans and focus on paying them off first.
You will save an unbelievable amount of money by avoiding those interest charges.
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5. Auto-deposit your savings.
Building up a savings or investment account can be a slow and boring process. It is also very easy to push off if you have to make the choice each month where your money goes.
By setting up automatic deposits, you are removing the temptation from your plate. This is also a very easy way to meet your milestones – just do the math and let the auto-depositing handle the rest.
Once you have money set aside it is important to invest it properly.
Your threshold for risk will depend on your end goal and life situation, but no matter what you will need a certain amount of diversification.
If you are saving for retirement, consider a 401K or IRA that is made up of mutual funds. If you are looking for a high return and can stomach a lot of risk, look into stocks.
Real estate and businesses offer other investment opportunities that can help diversify your portfolio.
In the end, everyone is capable of reaching their goals if they manage their money properly. If you make the right decisions when budgeting, saving, and investing you will be well on your way to your end goal.
Keep your eye on the prize and follow these tips for managing your money better. The outcome will be well worth it.
Article By: Ogbe Airiodion