The first thing we should all know about money is that it isn’t as hard to manage as you think. There are some basic guidelines that will help you get started on managing your money correctly. The sooner you start learning about how to, the better off you’ll be in the long run. Here are some things we wish we had been taught about money early on:
Have a Plan For Your Money
If you’re not sure what to do with your money, it can feel overwhelming to manage. That’s why it’s important to have a plan for your money. You have goals and dreams that are important to you–and they won’t happen without some careful financial planning. A budget will help guide how much of your income goes towards each area: saving for retirement, paying off debt, saving for emergencies, and keeping track of spending so that none of those things fall through the cracks (and then lead into future debt).
A good way to start is by looking at what kind of financial life goals are important, which can help you decide how much money needs to go into each category each month or year. This way you can ensure that you are covered financially should something unexpected (like car repairs) come up, while still making progress towards your goals.
Budgeting is a Must
Budgeting is the practice of setting aside a certain amount of money for specific expenses. Budgeting is important because it helps you keep track of how much money you have and where it’s going. By creating a budget, you will be able to see where all your money goes each month and make adjustments if necessary.
For example: Let’s say that your monthly income is $3,000 and all of this income goes into paying bills, groceries, gas, entertainment, and other expenses. It may seem that there is no money left to save, but if you create a budget and track your spending habits we’ll know for sure whether it’s possible to spend less without sacrificing the things that are important to you.
When budgeting, it is important to distinguish between things you need and those that are merely wants.
- Needs are things like food, shelter and clothing.
- Wants are all the other things that you would like to have, but don’t need. For example, if you have enough money to pay for your rent this month, and would rather spend the rest of your money to do something fun instead of paying off your credit card bill (which has some interest), then that’s an example of when your wants outweigh your needs in terms of financial priorities.
Credit Cards Aren’t Free Money
Although credit cards can be useful in certain situations, it’s important to understand how they actually work. While they offer the ability to purchase items and cover expenses that may not be affordable at the moment and can help establish credit, it is important to keep in mind that by using a credit card, you are essentially borrowing money that must be repaid. Failure to pay off the balance every month can result in interest charges, which can sometimes exceed 20%. Besides the interest, credit cards also come with a number of other fees. For example, some cards charge a late payment fee, annual fee, or may have an activation fee.
If you’re struggling to manage your credit card debt or seeking a more affordable borrowing option, consider applying for a personal loan. Unlike credit cards, personal loans typically offer lower interest rates and greater flexibility in terms of repayment. Consolidating credit card balances with one personal loan is a great solution to saving money on interest and having one fixed monthly payment.
You Need An Emergency Fund
The biggest lesson you can take from this is that it’s important to have an emergency fund. If you don’t have one, start building one as soon as possible.
You may be wondering what the best way to build up an emergency fund is.
The easiest way is through automatic savings transfers from your checking account into a high-yield savings account or CD (Certificate of Deposit). The more money that goes into your emergency fund each month, the faster it will grow – but don’t go crazy! It’s not worth taking on additional debt just so you can save more money right now; after all, if something truly terrible happens in life and all of our plans fall apart at once (which they often do), then we’re going to need some cash on hand anyways!
Save For Retirement Early On
It’s never too early to start saving for retirement. The earlier you begin, the more time your money has to grow and compound–and the more comfortable your retirement will be when it arrives.
If you’re in your thirties or forties and haven’t started saving yet, don’t worry! It’s never too late to get started on building a nest egg. You can still make up for lost time by contributing as much as possible each month (or every pay period)and continuing at that rate for as long as possible. If this sounds like an impossible task given all of life’s other expenses, consider generating some savings from other areas: perhaps selling items you no longer need on eBay or Facebook Marketplace, get a side gig, cut down on dining out, cancel underused subscription services…whatever works best for you!
We hope this article has helped you understand a little more about how to manage your money. It’s not easy, but it is possible! You just have to start somewhere and keep going from there. We wish we could tell you that there was some magic formula for success with money, but there isn’t; instead we encourage you to try out different things until something works for your situation. Just remember: don’t give up!
If part of your financial plan is to pay off high-interest debt, consolidate and save with a personal loan from Credit Direct. Check rates in minutes with no effect to credit score.