Finances are one of the most important things to get a handle on, and yet some people still don’t have proper control over their money. So, here are four ways you can actively manage your money.
1. Budget Realistically
If you’ve ever made attempts in the past to get on top of your money, then you will have definitely seen then numerous articles that preach the benefits of budgeting. While all of these articles make very valid points, very few discuss the importance of realistic budgeting.
Budgeting is a great way to track and maintain your expenses; however, if your budget isn’t realistic to what can and can’t be achieved, it is no use. You should first outline every penny of your non-negotiable expenses – such as rent, bills and debt repayments.
Then you need to honestly and strictly work out what you can spend the leftovers on and where you can make savings. If you really want to make savings but work on a tight budget already, try things like cutting out a daily coffee or weekly night out.
2. Stick to the 50/20/30 rule
Sticking with the theme of budgeting, one great method of this is to use the 50/20/30 rule.
With this method, you take your monthly after-tax income and split it into three parts, 50% for needs. 30% for wants and 20% for savings. This plan is great for those of you who find it difficult to stick to a budget.
Needs refer to anything that has to be paid, such as rent/mortgages, groceries, bills, etc. Wants are things that aren’t necessities but are things that brighten up your month, such as shopping trips, hobbies and meals/nights out. The final 20% goes to your savings.
3. Find A Bank That Works for You
It is important that you are banking with someone who is going to do the best for you and your finances. What that means will look different for different people.
For example, you may want a bank that doesn’t charge fees on its current account. You may want a bank that allows you to manage multiple accounts or loans from your app, or to have a manageable savings account.
If your current bank isn’t meeting your needs, then it is time to consider switching bank accounts to a provider who will. By doing this you will be able to choose a bank that will support your needs better and help you make your money work better for you. Whether this is fewer fees, better rates or more app functionality – finding the right bank for you will help you to save and manage your money better.
4. Get on Top of Debt
Though this one is easier said than done, it is one of the best ways to manage your money effectively. It is extremely hard to have good money management when you are still in debt. For this reason, it Is important that you try your best to try and help yourself get of debt.
For example, make actionable repayment plans, speak to your bank, if you are using the 53/30/20 rule from above, that 20% for savings could be redirected to pay off your debts. You should also consider seeking out others who have debt repayment issues or success stories as this will help keep you motivated.
These are just a few of the many ways you can start to get on top of your debt.
Good money management is a skill that takes time and proactive to hone. However, as long as you are committed to being more financially responsible, then these tips will help you along the way.