According to a poll done by Monster Meter, 50 percent of Americans have less than one monthly salary saved up for rainy days. It doesn’t take a financial genius to figure out that this is not good. Living from one paycheck to another is not a lifestyle that can guarantee you a secure future, and you know it. Of course, this is not entirely your fault. Low wages and high living expenses also play a role, but let’s stick to the things you can control, like careless spending and impulsive buying. If you are ready to take up the reins of your finances, here are a few helpful tips.
Know What You Have
There is no feeling quite like the one when you find some forgotten cash in a pair of pants you haven’t been wearing for a while. Although additional cash is always a pleasant surprise, finance management is always the most efficient when it is surprise-free. Keeping a journal of your incomes and expenses is always a good idea. Calculate your earnings and expenses on an annual basis, and make sure you are not spending more than you earn. Reckless spending could lead you into a hopeless spiral of debt, you won’t be able to get out of easily.
Remember when Monica (Friends) bought those “killer” boots that were, in her own words, killing her “one toe at a time”? She described them as practical and wearable with anything, while Chandler had a witty advice for her: “You could wear them with shorts on a street corner and earn the money to pay for them.” The bottom line: when buying something ask yourself do you really need it, or you just want it? How often will you use it? Could you get a better price? Where does it sit on your monthly priority list? And, can you afford it?
Keep Track of Your Expenses
It is easy to get lost in our monthly and daily expenses. Sometimes we don’t even notice where does all that money go, and even the smallest things, such as tips can come back and hit us in the face. The only way to put an end to such surprises is to track your expenses. And by tracking, we mean following every cent you spend – from rent payment to a pack of gum.
Save It for a Rainy Day
Rainy days are not just a myth. The only question is: “Will you be ready for them?” Don’t let them catch you off guard – put a certain sum aside each month. For starters, it can be a small sum, until you make a habit out of it. If you just can’t help yourself, consider automated deposits. This way a certain sum of money will be taken directly from your paycheck each month, so you won’t have any problems with temptation.
Make Plans for the Future
Having a retirement plan is for boring people, right? Wrong. Having a retirement plan is for smart people. Government-sponsored retirements are never really great, so you should take matters into your own hands. Making a college fund for your children is another thing to keep in mind. You need to have all the possible scenarios checked in order to make sure that your money goes to the right places. This also means taking care of your family in case of your death. As unpleasant as it may be to even think about such situations, it is a responsible thing to do. Luckily, nowadays, you can make wills online which makes this entire process less awkward and much quicker.
Make Your Money Work for You
If you’ve ever asked yourself how the rich are getting richer, here’s a clue for you: their money grows even while they’re sleeping. By investing in certain areas like ETFs (https://kryptoszene.de/etf-sparplan/), stocks, shares, and bonds, you have a greater opportunity of being able to increase your long-term income. Whilst these options tend to be the most popular when it comes to making an investment, there are other things you can do too, and so it doesn’t necessarily mean that you should be investing in stock market only. Investments include everything that can earn you more money than you’ve previously had, such as starting a small business, or trying to get a better job by educating yourself further.
The most important rule of personal finance management will always remain the same: do not spend more than you earn.