7 Ways to Stay on Top of your Finances

If you have been struggling with money problems, you are not alone! One survey found that only 40% of Americans follow their budget and the average household has a debt of $135,065, according to a 2018 study by NerdWallet.

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It might sound like a cliché but getting a handle on your money situation is a nice trait to have if you are to live a comfortable and stress-free life. Yes, knowing how to get the most out of every coin will help you, especially during these tough times. This guide will take you through a few ways to get your finances in order.

Create a Budget

Determining your expenses and household income is very vital.  To come up with a budget, write down all your sources of income each month, be it investments, salary or rent. Note down all the things you have to spend your money on for instance bills, fees, mortgage, insurance, and taxes. Further, go ahead and deduct your expenses from your income so as to know your total disposable income left. The disposable income is simply the amount set an individual or household has to spend or save after income taxes. Budgeting will definitely help you understand your position each month as this will help you start to adjust things a little to match your needs. For instance, you may decide to spend less on entertainment which is part of your disposable income and saves more. Celebrate your small wins once you reach a goal and keep moving forward. Tip: Consider using an app or easy-to-use online budgeting tools for this.

Track your Expenses

One of the easiest ways to stay on top of your finances is by tracking where your money is going. Hold yourself accountable and take a look at what you have been spending your money on regularly and see where to adjust by spending more effectively or by simply making cuts. Your daily purchases might look small until you take a look at your expenses and income. Track your expenses by date and determine if they match up with your real-world experience. Cut out unnecessary expenses for instance services you don’t use anymore or regularly such as gym memberships, annual subscriptions eating out, and streaming services. Get into the habit of plugging in your daily or weekly spending to check in with your finances and make more progress.

Create an Emergency Fund

An emergency fund is absolutely critical. We know how life can be quite unpredictable and it may throw a huge surprise when you least expect it. It may be a job loss, hospital visit, accident, essential car repair, or something more major. A financial safety net is an essential part of managing your finances and being independent. To prepare for emergencies and to avoid unexpected debt; set aside a certain percentage from your paycheck for instance 10% which is a good benchmark and mental trick that makes it easier to save. Setup a separate emergency fund account from your normal savings account and make it a priority to put money into your emergency kitty with each paycheck.

Manage your Debts

Most people have to deal with debts such as mortgage payments and other types of loans. They are the most popular ways for borrowers to receive fast emergency cash. However, you will need to manage your borrowing costs especially for loans with variable rates and credit cards. One way to do so is to assess your debts regularly to check if any conditions have changed, repayment costs, and adjusting your debt funding. For example, you might have gone for a Title loan owing to its advantages like quick and easy approvals. But, problems can crop up when you are in a dire financial situation that you can’t handle the terms of that loan. In this case, you can go for what is known as a Title Loans Buyout to refinance the initial one. You can be able to lower your monthly payments and interest rates thus giving you a breather. That said, you should create a plan to pay off all your existing debts.

Understand your Credit Score

Your credit score can have a big impact on your finances. Often, lenders are willing to offer borrowers with high credit scores better loans and at lower interest rates. A small interest rate reduction can save you thousands of dollars as you apply for large loans such as mortgages. Improve your credit score by taking action. Get started by pulling your credit report to counter-check for any errors and use a credit monitoring service to hinder any future errors.  Monitoring your credit score rating is vital especially if you want to either buy a car or house in the future on low-interest credit. Also, ensure your credit utilization is low and make your payments on time. Remember, borrow only what you need!

Invest in a Retirement Fund

One of the best things you can do while you are still working is investing in a retirement fund. Many young professionals tend to avoid such saving plans as they would rather hang onto their money. However, you will not regret deciding to invest in yourself once you grow old. There are several retirement plans you can choose from. All you need to do is intensive research and find one that suits your needs best. The sooner you start saving the less the principal amount needed to invest to end up with the amount you need to retire. Also, the longer your money will grow with compound interest.

Add More Sources of Income

It is important to look for more income-generating opportunities on the side in addition to your job if you can. Of course, the more income you can earn, the more likely you can attain stability. You can get a job on the side to provide another income source aside from your full-time job. The beauty is that these days, a majority of the side hustles can be done right from the comfort of your home during your spare time. Take time to think about what you are good at and the kind of hobbies that can earn you more money. With an extra income, you’ll be smarter with how you spend money and ultimately save more.

Final Remarks

Making financial decisions can be stressful and hard. However, learning to stay on top of your finances is a vital skill everyone should pick up at an early age. It is important to understand how different financial products work.  The financial literacy tips we have covered should help you to stay afloat and trim your debts and attain your goals.


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