Do you cringe when you check your bank account?
It doesn’t have to be this way. Managing your finances shouldn’t be a significant source of stress in your life.
Even if it seems tough, there’s a light at the end of the tunnel. But first, you must start developing sound money management habits. You should also start learning more about money and how it works. Are you up for the challenge? The only hard part is taking that first step.
Here are 7 money management tips that will get you back on track.
1. Track Your Spending
Control your money, or it will control you. You’ve probably heard that more than once, and for a valid reason. It’s impossible to get ahead financially if you don’t have a handle on your dough.
Take a look at the transactions from your checking account to see where your money is going. If you think you’ve been paying a lot of bank fees and interest charges, you might want to try our partner Cushion. They can help get your bank and credit card fees refunded automatically.
The next step is to sit down and create a budget. If the thought of budgeting makes you cringe, take a deep breath, and relax. It’s not as difficult as it seems, and following a budget gives you power over your money. Follow the simple 5-step process found here to create a spending plan in just minutes.
Wondering how to handle financial emergencies? There’s no concrete way to prevent them. However, being proactive and putting your savings on auto-pilot can do wonders for your finances. You’ll be more prepared when life happens. Even better, you won’t have to blow up your budget, ask around for money, or resort to high-interest debt products to find relief.
2. Cut Out Non-Essentials
No need to deprive yourself of the basics or eat Ramen noodles for a year. But it’s a must that you axe non-essentials from your spending plan to get your finances on track.
Ask yourself: Do you really need cable when there are far more affordable options to watch shows and movies? What about your DoorDash and GrubHub habit? Do you really need to pay a huge up-charge for someone to deliver your food? What about lunches? Would it be the end of the world if you stopped eating out every day? Brown bag it!
Got a pricey beauty routine? Could you do away with the regular trips to the spa? How about guys or girls night in over an expensive night out?
These are just a few simple ideas to help you cut back on non-essentials. When you have a moment, visit your budget and review expenses to determine which can be trimmed or eliminated to free up more cash.
3. Save For the Future
The best time to begin investing and saving for the future is now. Even if you don’t have a ton of disposable income to work with, any amount invested allows compounding interest to work in your favor.
Depending on the investing or savings vehicle you choose, there could also be tax benefits. Many retirement accounts allow you to make pre-tax contributions, which lower your taxable income. In turn, you’ll pay Uncle Sam less money at tax time. That’s a win-win for you! However, there can be penalties for early withdrawal with retirement accounts. So read the fine print.
4. Start Investing
Prefer a more flexible savings option to stash cash for your future? You can start building wealth through investments without having to do a ton of legwork.
A fully managed investment account from MoneyLion is a viable choice to make your money work hard for you. It features no management or trading fees, and there are no account minimums. So, you can get started with $1 if money’s tight or $1,000 if you have a nice sum of disposable income or anything in between. The choice is yours.
5. Understand Debt
Some financial gurus shun debt and urge consumers to stay far away. But not all debt is bad, and having some debt actually helps build credit.
It boils down to the type of debt products you select and how you manage them. You want a healthy mix of revolving (credit card) and installment (loans) debt with competitive interest rates to establish a solid credit history. Credit builder loans are also ideal if you need to restore your credit health.
The trick is to use debt responsibly and make timely payments each month. Keep the balances on credit cards low. Creditors like to see your credit utilization at 30 percent or lower, and that’s also the sweet spot for the FICO scoring model. So, if you have 2 credit cards with $5,000 limits, you shouldn’t spend over $3,000 combined on both.
Also, try to steer clear of predatory lenders that offer payday advances, title loans, and high-interest installment loans. They target consumers with bad credit that have trouble accessing affordable debt products elsewhere, which perpetuates a cycle of unhealthy borrowing habits. And the more cash you dole out each month on debt payments, the more difficult it becomes to stay on track financially
6. Increase Your Income
Saving money isn’t the only way to get your finances on track. It’s equally vital that you seek out opportunities to increase your income. Doing so helps you build a cushion faster, assuming you follow a budget. More money in your pocket also means more opportunities to boost your nest egg and build wealth more quickly with increased contributions to your retirement or investment accounts.
Consider asking your boss for a raise or exploring career advancement opportunities elsewhere. You can also take on overtime at work, find side gigs or start your own business.
7. Stay Involved
The more financially literate you are, the easier it is to get ahead financially. Sharpen your money management skills by reading up on personal finance often and implementing the knowledge in your everyday life.
Pay attention to the media and what they’re saying about personal finance. Many news channels, magazines and newspapers have segments and columns on important money matters. Be on the lookout for trends they cover and capitalize on the opportunity to learn more as often as you can.
Establish a Bright Financial Future
MoneyLion is committed to helping you maximize your dollars. Use these money management tips to build a solid foundation, stay on track and position yourself for financial success. It may be quite the journey, but you’ll be so glad you took the first step.