Quickfire Guide To Starting Money Management
Not everyone is able to handle their finances from day dot. It is a skill and takes time and effort to get right. It is often the case that financial mismanagement spurs on the decision to change the way things are being done.
However, everyone starts somewhere. So here is your quickfire guide to starting you off, and you can check out other posts on the blog to help you in other areas.
Contents
Budget
One of the first steps to financial management is your budget. This step does take time but is worth it in the long and short term. There are a lot of perks to having a budget set up.
- Less unexpected costs
- Less likely to get a lot of debt
- Pay debts faster
- Improve credit rating
- Opportunity for savings
There are a few steps for you to be able to work out your budget. You’re going to need to work out what you have available. Add up what you spend in each of these areas:
- Leisure – holidays, takeout, restaurants, shopping
- Travel – gas, car, public transport
- Financial products – universal life insurance, car insurance, pension
- Living costs
- Household
To get started, go back over the last few months of spending, and start adding figures to a chart. Using a simple excel spreadsheet will mean you can come back and edit it as much as you need to.
There are many financial management apps you can use to help you.
Paying Off
If you have been making minimum payments, then, unfortunately, you’re not going to be paying much off at all. It usually makes sense to start paying off the things with the highest interest first.
When looking at which options make the most sense to pay more towards, make sure you aren’t lowering anything else beyond your agreement. You can often get in touch with any of the companies holding your debt and come to a repayment agreement that is more favourable for you.
Saving Goals
Simply the act of setting a goal, means you are more likely to reach it. Finding the motivation for saving can be an issue too. Emergency savings should be top of the list so that you have something to fall back on if anything goes wrong.
The best and easiest way to save is with automatic savings. Most automatic saving technology will work out what you can afford to save and do it automatically for you.
Think about what the goal here is, is it paying off a debt in bulk, or perhaps it is about having a holiday.
Compare
If you had the same suppliers for years, then it might be time to consider other options. Read the fine print as the opening offer can often be cheaper for the first few months. There are many comparison websites that can help you look at the savings, the different options, and how to swap companies.
Flexibility
It is really important that you try to be flexible about things. Sometimes you can’t put anything in the savings pot, and some days there are unexpected costs. So be flexible and do your best.
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Good luck!
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/