Money is a scary topic for a lot of people and it’s sometimes easier to stick your head in the sand rather than deal with personal finances. However, that’s a huge mistake. Not taking care of your money can lead to unnecessary debt and stress, not to mention an unhappy retirement. Read on for some useful personal money management tips that apply to everyone, whatever your age.
Set Up a Budget
Most people fall into debt without even realizing it. They simply have no idea how much money comes in and goes back out again, and so they spend with impunity. It’s only when credit cards max out and there’s no money left a week after payday that they cotton on to the fact that they are broke.
Setting up a budget is something we all should do, regardless of how much money we earn (or don’t earn). Budgeting is a basic life lesson best learned as early as possible.
Add up your expenses and subtract them from your income. Unless you’re living beyond your means, there should be money left over at the end of each month. And if there isn’t, it’s time to start looking at where you can save money.
Debt is expensive. The more debt you have, the more your personal finances are in jeopardy. Some debt, such as a mortgage, may be unavoidable, but short-term debt like credit cards and personal loans are best avoided.
If you have short-term debt, see if you can reduce it. Can you afford to make larger repayments each month? If you can move some of the debt to an interest-free card or consolidate your loans with a cheaper interest rate, it could save you money.
Whatever you do, try to avoid only paying the minimum each month.
Go through your bills and look to see if there are any you can eliminate or reduce. Utility bills are one area where you can save money by switching to a new supplier.
Start a Savings Plan
Once you have a handle on your debt, start saving for a rainy day. It’s best to repay debts before saving, as the cost of borrowing is always higher than the interest rates on savings, but it’s also sensible to have a small pot put aside for any unexpected expenses.
Put a small sum away each week or month, such as the money left over from your grocery shopping. If you receive money unexpectedly, such as a tax refund, put it into your savings account rather than blowing it on something frivolous.
If you are not very disciplined, set up a transfer into your savings account on the same day you get paid, so the money isn’t missed.
Plan for Retirement
Retirement might seem ages away, but it’s never too early to start putting retirement plans into place. If you don’t have a pension plan in place via your employer, set up a private pension. Speak to a financial advisor for personalized advice on retirement planning, such as choosing safer stocks for your retirement savings.
Look at Ways to Make Extra Money
If you have the time and the inclination, look at ways to earn some extra money. There are plenty of opportunities in the age of the internet, such as online investments or content writing. Or, if you prefer, pick up a second job in the real world. Earning a second income is a useful way to boost your savings account.
Once you learn to manage your money better, life will become a lot easier, and you’ll no longer have palpitations when bills drop on the mat.