If you’re like most other Americans, times are a bit tough at the moment. Research shows that 40% of Americans can’t afford an emergency $400 payment, while 60% of individuals make less than $40,000 a year.
Factor in a global pandemic, and an already precarious financial state can quickly turn into something even worse.
To help you gain some semblance of control over your money, today we’re going to look at seven simple personal finance tips that can make a big difference. All of these points can help you achieve a level of financial security that can help you preserve through even the most challenging of times.
Table of Contents
Read on to learn more.
Be Aware of Your Spending Habits
Most people spend more money than they realize, often on things they don’t need. If you’re looking to take control of your finances, one of the first things you’ll therefore need to do is be aware of where your money goes each month. That means tracking your spending.
From scrutinizing your bank statements to using an app like Mint, there’s no shortage of ways to see where your money goes. You want to get to a point where you’re aware of every single purchase you make.
Good money management starts with spending awareness.
2. Set a Budget
In addition to keeping track of the money that goes out, you’ll also want to have an idea of all the money coming in. Once you’re aware of your income and expenditures, you can then get to work crafting a budget.
When you’re staring at an excel sheet and planning for the upcoming month, it’s tempting to set yourself strict and rigid spending boundaries. This might seem beneficial, but it can lead to yo-yo spending in the long run.
Make sure that the budget you set yourself is realistic. You want it to help get you on a financial path towards success, but you also want to ensure that it’s sustainable.
3. Work on Growing Your Savings
As mentioned, most Americans don’t have savings for a rainy day, or even for an emergency. However, given the multitude of factors that can arise, having some extra money in the bank is essential. Your money management priority should, therefore, be to grow your savings.
While setting aside tiny amounts of money each month might not grow your savings account as fast as you’d like, it’ll still surprise you how much money you can accumulate over time. Before you know it, you’ll have a safety net in case of crisis.
If you’re not good at remembering to save your money, look into payment plans that round the amount of money you spend up. This spare change can then make its way into your savings account.
4. Don’t Ignore Your Bills
It’s tempting to let your bills get out of control when money is tight. Doing so, however, is often against your long-term interests.
When bills go unpaid, it can affect your credit score. This can then affect everything from your ability to take out a loan to the places you can live.
Set aside enough money each month to pay off any bills you have. If you’re struggling to pay bills because of outstanding debt, consider looking into a Plenti debt consolidation loan.
5. Look for Reoccurring Charges to Cut Out
In addition to dropping money on purchases and other non-essentials, most people also subscribe to several services. From TV streaming platforms to fitness plans and magazines, these costs can add up fast.
If times are tough, spend some time figuring out whether you can cut out any of the monthly charges you have. There’s a good chance that you don’t need at least one or two of them.
By cutting out just two $10 a month charges, you end up saving $240 throughout the year. This money can then make its way into your savings account.
6. Use Your Savings for Big Purchases
While having enough savings for emergencies is essential, don’t be afraid to also use the money you set aside for big purchases. This may defy traditional take-out-a-loan logic, but it’ll benefit you in the long run.
When you don’t have to worry about making monthly payments towards things like your home or vehicle, you end up having greater levels of financial freedom. You can then choose to save that money or spend it on something meaningful, like a trip.
If you can’t afford to pay for a big purchase fully, don’t worry. The more money you can put down initially, the better off you’ll be.
7. Think About Investing
Investing is often the last thing on people’s minds when they don’t have much money. However, by making the right investments, you can plant seeds that will one day grow into something prosperous.
Putting your money into risky stocks is not a good idea, but creating a long-term investment strategy can be smart. Over time, these investments can net you additional money.
Like your savings account, try setting aside small amounts of money to invest. Over time, the money you have invested will grow!
Use These Personal Finance Tips
Taking control of your finances can be challenging, especially when systemic barriers hold you back. However, most people don’t realize the number of simple yet effective things they can do.
Use the personal finance tips mentioned in this guide to help grow your savings account and eliminate financial insecurity. By following the tips mentioned, you’ll be able to set yourself up for financial success.
Are you looking for more money management tips? If you are, make sure to check out the rest of our site for all things finance.