Indeed, growing your wealth isn’t an easy process. In fact, it takes a lot of cutbacks, starvation, and a handful of courage. But – what if we told you there’s an easy way out? Keep reading if you want to kick-start your journey to financial freedom.
Unfortunately, managing personal finances isn’t the kind of thing they teach you in colleges or schools. This lack of basic financial knowledge leaves several young adults clueless and bewildered about spending their money, applying for credit, and staying away from debt. Above everything, there are, of course, our emotions – because, let’s admit it, everyone suffers from a few hang-ups when it comes to money. Right?
So considering everything above, how can an average individual manage their finances?
The process isn’t as complex as you think. In fact, it’s so simple that we’ve broken down the personal finance management tips into a few pointers. If you live by the following pieces of advice, you’ll never have to mourn on money ever again.
Financial wisdom begins with knowing something about finance, even if it is beginner-level stuff. After all, no one is generally going to walk you through the process and show you how to do it. Taking charge of your financial health is on you.
Many courses and degree programs are available for those who have zero knowledge in managing finances. And since virtual learning is the new norm, you can aim for almost any program by going on a searching spree. For instance, if you’re already an accounting major, you can apply for an online masters in accounting no GMAT, where “GMAT translates to no entrance examination for those who are working professionals.
While you’re at it, don’t forget about learning about your credit score. Learn how it works and what steps you can take to make it better. Moreover, knowing everything about finance is one of the best ways to prepare for your financial future truly.
2. Create a Budget & Track your Net Worth
If you haven’t created a budget, not even on a notepad, do it now.
A budget gives you the image of what income you are bringing in, how you are spending, etc. Seeing and visualizing these figures can help you catch problems or make your eyes pop from some tough-looking numbers. But don’t obsess over this.
In addition to creating a budget, you must calculate your net worth, regardless of how ugly it might be.
So how is this different than creating a budget?
Tracking your net worth can keep you on track and assist you in visualizing where you are financial. There are numerous online tools and applications to simplify this process. So please make use of them in the process of managing your finances.
3. Restrain yourself
Your parents probably taught you this skill when you were little. If not, note that the sooner you acknowledge the fine art of delaying satisfaction, the easier it will be for you to keep your finances in order.
Although you can easily buy something on credit the minute you like it, it is better to wait until you’ve saved up some cash for the purchase.
4. Just think: do you want to pay interest on a box of cereal or a pair of denim jeans?
If you make a habit of throwing all your impulse buys on credit cards despite not having enough to pay your bills fully at the end of the month, you’ll go bankrupt. Also, there’s a chance you’ll still be paying for those items in the next ten years.
Sure, credit cards are useful, but using them in non-emergent cases can lead to unhealthy financial consequences. So ensure you keep your credit card for emergencies only.
5. Pay off your debt
When dealing with debt, there are two primary strategies:
- Snowball: Pay off the minor debts first, no matter the interest rates. Although you may pay more overall, the sense of achievement and empowerment could help you pay off your debts quicker.
- Avalanche: You can pay off the debt with the largest interest rate first in this approach. It helps you reduce the amount of cash you pay back overall.
- Aim for a Side Hustle
Are you satisfied with the amount of money you have every month? If you’re anything like most of us, a little bit of extra cash every month could make a huge difference.
Starting a side hustle may be the best way to supplement your income.
Don’t worry, as this will not take up most of your time and push you to sacrifice your free time to start a successful side hustle. One of the many advantages of side hustling is that you can do it whenever you want and as much as you want.
Another thing about side hustling is that the profits are virtually limitless. Since you’re not bound to a salary or paid hourly, it’s up to you to decide how much you want to earn.
That concludes our tips for saving, managing, and growing personal finances. If you’re feeling overwhelmed, please know that you’re not alone. Take a deep breath! You don’t need to do everything at once. Instead, go for small, unfailing daily improvements over time.
Furthermore, once you build up a habit of saving on minor transactions daily, the result will be visible with time. What’s more, you will discover newer ways to keep saving more money. Just remember that you won’t be able to go anywhere if you don’t start. So start adding these tips to your everyday spending regime and see the difference.