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Everyone can implement a plan to be in control of their financial future, No matter their financial situation. For many this might seem like a daunting task, but with the right money management tips, making your money work for you can become second nature. Once you have a plan in place making adjustments throughout the course of time is manageable and less disruptive to your daily finances. Read on for financial planning and money management tips.
Know What You Want
Really knowing what you want from your finances today and in the future can be challenging. Taking some time to decide how much money you want to retire with and when you want to retire as well as how much money you want to have in your life to be comfortable between now and then, is essential. You can’t plan for what you don’t know.
Understand Your Financial Reality
One of the most impactful actions to be taken for financial planning and money management is first understanding your current financial picture. Many people don’t fully understand their financial situation and can find it hard to take the steps to comprehend the facts. Taking the time to get to know these basics will help lay the foundation for your personal financial plan.
Being realistic about your gross and net income is one of the first steps to financial planning and money management. Creating a list of all of your income sources and what you “take home” from each of these sources will help you know what you are working with.
You may have a pretty good idea of what you spend on bills such as rent/mortgage, utilities, car payments, auto insurance, etc., but it is easy to forget about all of those smaller expenses that consume your income each month. These might include groceries, gas, streaming apps, daily coffee on the way to work or even lunches. This is often how a budget looks great on paper and then somehow doesn’t seem to work as planned. These small items sneak in and gobble up bits of your income somewhat unseen. Being realistic about your expenses is vital to managing your money.
The debt category of your financial picture is one that people often try to avoid. Though you are likely aware of any substantial debt you have in the abstract, the actual numbers can seem overwhelming. Taking the time to really list all of your debts, big and small (even that small loan from your great uncle) is vital to beginning to plan your financial future.
Pay Yourself First
You may have heard people say that it is important to pay yourself first. This can seem difficult to anyone who is financially challenged and on a tight budget, but in order to make any traction in your financial planning you do need to pay yourself before your bills. This doesn’t mean don’t pay your bills. This means that you should set aside some money each paycheck, even if it is a small amount, to go toward a savings and/or investment account. Starting to put money into your future is the only way you will reach your financial goals.
Investing in Your Future
While you can choose a savings option such as a traditional savings account (some earn nominal interest over time) or certificates of deposit (CDs), there are also a number of investment options available such as stocks, mutual funds, commodities (silver, gold, oil, etc.) and real estate. Take a little time to research the options to decide where you want to put the money that you pay yourself so that it works best for you.
The first step to gaining control over your finances is to act, regardless of your goals. Understanding your financial situation and implementing budgeting tools to both monitor and stay on track is essential. There are many tools available to help make the process easier. Selecting the best budgeting apps for your circumstance can provide you with the assistance needed on a daily basis and create good habits.
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