Managing your finances can be very challenging. You spend hours in high school learning algebra, but no one ever taught you how to balance a checking account or assess interest rates. The more you know about money, the more powerful your finances become. This quick and simple guide should help you get more control over your money, and use it to achieve your goals and plan for your future.
1. Boost Your Credit Rating By Managing Your Debt
Not all debt is bad. Though it has a bad reputation, debt can be a useful financial tool when used properly and managed appropriately. The most important thing is to pay down the debt and not just pay off the interest. When people run into problems with credit card debt or loans, it is usually because they have just been paying off their interest, while the initial amount they borrowed remains the same.
Having a high credit rating can help you gain access to reduced interest rates from new lenders, which you can use to pay off your debt quickly. Managing your credit score helps you to manage your debt. If you have credit card debt you should look for ways to improve and monitor your credit score to give you more ways to manage your money.
Read this guide from Tally if your credit score dropped recently. They have been helping people to manage their money and reduce their credit card debt for decades. Tally can get you access to reduced interest rates so you can pay off your credit card debt quickly while boosting your credit score. If your credit score dropped 100 points, Tally could help you to get them back.
2. Set Goals and Track Your Progress
The best way to take control of your finances and manage your money is to put it to work for you. Set financial goals for yourself and track your progress as you reach for them. This could be as simple as paying off debt or setting a savings goal. Slowly reducing your regular expenses is also a good goal, and it can give you extra money to save or to spend on something to treat yourself with.
Having a goal in mind when you manage your money can be a great motivator. It can be time-consuming and challenging to control your finances and stay on top of your budget. With a goal on your horizon, such as a dream vacation, a new car, or the down payment for a mortgage, you will find it easier to keep track of your progress and maintain financial discipline.
Using a calendar can help you plan your finances for the future and set yourself reasonable financial goals. You can use a calendar to prepare for regular expenses like rent or credit card payments, and make sure you have the money in place to cover them. It will help you see when you have disposable income you can use to add to your savings or pay for irregular expenses like birthday gifts.
3. Hope for The Best But Plan for The Worst
Emergencies can cause long-lasting financial problems. Sudden expenses like health care costs or car maintenance are difficult to deal with if you do not have funds ready to absorb the expense. Your first savings priority should be a rainy day fund to help you through a sudden small financial crisis.
If you are lucky, this money can stay in a savings account earning a little interest. You may even use it to help with a bigger financial goal like the down payment on a mortgage in the future. Having a small amount of money squirreled away can help make a stressful event less disruptive, and give you added peace of mind no matter what happens.
You can create this small fund quickly if you are willing to make some small sacrifices. Look at your monthly income and expenses for the last few months to find costs you can cut. This could be small but regular purchases like lunches on workdays or convenient cups of coffee in the morning.
Stopping these costs and putting the money into a savings account can help you build a pot of a few thousand dollars in less than a year. From subscription services to Starbucks, there are cheaper options out there. You can make your own coffee and take it with you to work and switch to free streaming media services instead of Hulu, Disney+, or Spotify.
Making these simple changes can help you reap huge rewards in the future. Taking control of your finances and managing your money gives you the freedom and opportunity to start your own business, own your own home, prepare for your retirement, or all three. Set aside a few hours to assess your budget and make some financial plans and you will be able to take control of your future.
Also read: How to Cut Down on Credit Card Bills
