Managing your finances correctly can make the difference between living in splendor, or poverty. It is a common misconception that only the wealthy can have decent nest eggs built up. That is simply not the case. No matter what level of job you are at, or how much you have extra every month, you can save money up for days when you need it. Many steps can be taken to help you figure out your finances, and to keep them in control.
1. Budget
The most important thing that you can do is to make a detailed budget and follow it. MoneySmart states that having a budget can give you the feeling of being in control. It should detail all your expenses. The first on the list should always be a set amount for savings.
It would be best if you had a set amount come out of your check and placed into a savings account. The basic rule for this is that you want to have at least three months of bills saved up in an account in case of emergencies.
2. Track Spending
Keep track of everything that you spend money on. All your bills should be automatically taken from your account, so you do not accidentally forget to pay one. If you buy a bag of chips during your lunch break, write the amount down, or type it into a mobile application on your phone.
If you have a program that allows you to digitize all your receipts make sure every expense gets added. If you do not have such a program, you may want to get one. It organizes everything to make it easy for you to see were your money goes, and it helps at the end of the year when you go to file taxes.
3. Loans
You can take out a personal loan to consolidate all your bills that are not reoccurring. This allows you to make one payment, rather than numerous ones that you may forget to pay. If you rent, you may want to consider getting a home loan so you can work on buying your own place.
Even if it is a small house or apartment to start with. This may sound crazy but if you check into it, you may find that a house payment may be cheaper than the inflated rent prices, if not, it will be close.
There are also home loans designed for borrowers with a low credit score so even if you are not able to get approved for a large loan, you can still make your dreams come true.
4. Credit Cards
Cards are a fantastic way to increase your credit score if they are used correctly. You need to consider getting rid of a couple of them if you have a wallet full of them. Keep your top two and destroy the rest. Only use them when necessary and pay them off every month. It has been found that most people carry a balance every month on their credit cards.
The interest will continue to be added to your accounts, so you are paying double what the item is worth. Having cards for emergencies is always a good idea but using them to buy things that are out of your ordinary means will destroy your financial position faster than anything else.
Managing your finances is like managing yourself. You know those times when you want to tell your boss where to go, but you bite your lip to keep your job. Finances are the same. When you want to buy that new mobile phone take a step back and ask yourself if you truly can afford it. If the answer is yes, then you have your budget figured out. If the answer is no, keep it in the back of your mind and use it as a goal. Never put yourself backwards just to get something new or nice.
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