Finances can feel overwhelming to manage, but straightforward strategies can give you more control and save you time and resources. Here are some effective methods to apply to your money management that will help you:
Track Your Spending
Track your expenses and know where every bit of your money goes. If you can’t do this, you won’t be able to conquer your budget. Help yourself by finding a way to work with your expenses that isn’t painful. I’ll save the budgeting part until the next “Five Ways to Get Your Finances Under Control” post. For this entry, I’ll focus on the tracking part.
Weekly Budget Challenge
Set aside a precise amount of cash for your weekly spending. For instance, if you select a $100 weekly budget, break it into daily limits. When you hit a certain number, say $20, move that to your savings account as a buffer for emergencies, and keep on keeping your budget until next week.
Emergency Fund
Each month, take a portion of your income and set it aside for emergencies. This fund should be reserved solely for unexpected expenses and should give you peace of mind when financial surprises occur.
Cash-Only Strategy
Make a compartment for one-dollar bills. That way, when I want to make smaller purchases, I can use cash instead of breaking larger bills or using cards, which can lead to my overspending.
Credit Card Management
To prevent the piling up of credit card debt, zero in on retiring one card each month. Your emergency fund should be kept distinct, with funds accessible only when the situation demands it. This not-so-simple act of self-discipline, in conjunction with the retaining of a low debt-to-credit ratio, allows for the maintenance of a credit score that will not embarrass you.
Weekly Review
Keep a journal to track your habits of expenditure. Review your expenses weekly and ask yourself, “Did I stay within my budget?” This simple exercise can help you maintain a cash flow that leaves room for a financial cushion, avoiding the kind of emergencies that lead people to the types of predatory loans that keep them in a state of poverty.
Identify Spending Leaks
You may discover that you’re consistently spending too much in one or more areas by keeping a close watch on your expenses. If you then tackle those problem areas and try to plug the leaks, the savings could very well amount to $20 or more, on average, each week.
Automate Savings
Have your paycheck directly deposited into your savings account rather than your checking account. This helps you save and reduces the temptation to spend.
Limit ATM Withdrawals
Limit yourself to one ATM withdrawal weekly. This strategy makes you think hard and long about your spending and compels you to stay on your budget.
Immediate Expense Tracking
Immediately after making a purchase, deduct the amount from your checking account. This practice keeps you conscious of your balance and helps fend off the kind of spending that can lead to credit card debt.
Debt Payment Strategy
When you make loan payments, think about sending extra amounts to the next lender on your list. This can speed up not just the repayment of that particular debt, but also bring you closer to a debt-free life, allowing the funds that were once tied up in payments to be channeled into savings or investments.
These strategies can be executed to simplify financial management and enhance the opportunity for a more secure financial future.
