Money management is a significant hurdle for millions of Americans. This is especially true of those who find themselves living paycheck-to-paycheck.
But still, whether you need to totally overhaul or financial life or are just looking for ways to free up extra cash, there are a number of important steps you can take.
1. Track Your Spending
The first tip involves being proactive about tracking your spending. The more you understand about where your money is actually going, the better the chance you’ll have at improving your finances moving forward. Look for things to cut like streaming services or other expenses that you may like but don’t need. Once you have a complete picture of your spending, you’d be surprised by what you’re able to free up.
2. Create a Monthly Budget
The second tip involves creating a monthly budget that is every bit as accurate as it is realistic. Take a long, hard look at all of your firm expenses. These include things like your mortgage or rent, your utilities and more. Find out how much money you absolutely need every month. Then, you’ll know what you have in terms of disposable income.
3. Pay Down Debt
Third, make an effort to pay down any debt that you may have – but try to do so in a strategic way. If you have multiple credit cards, focus on the ones with the highest interest rates first. You could even potentially take out a debt consolidation loan to combine all of those balances into one monthly fee that is more manageable with a smaller interest rate as well.
4. Pay Bills On-time
Fourth, make sure that you’re paying all of those bills on-time and in full every single month. Make a chart of all your due dates and outstanding balances and do whatever it takes to help pay them when the bill itself comes due. Not only will this help improve your credit, but it will also avoid costly fees and other penalties for late payments as well. There’s nothing worse than having a $200 bill turn into a $250 bill just because you missed a payment.
5. Save For Large Purchases
Finally, you should always make an attempt to save up cash to make those large purchases. Yes, those credit cards in your wallet may be enticing and instant gratification is a wonderful thing. But if you save up cash and purchase items that way, you accomplish a few key things all at once.
First, you avoid costly interest charges that will make those large purchases far more expensive than you probably realize. Next, you’ll avoid the possibility that you miss a payment on those cards. That could not just again land you with a late fee or penalty, but increase your interest rate as well.
In the end, taking control over your finances can be time-consuming and sometimes frustrating, yes. But it is also more than worth the effort, especially once you consider the types of hassles and stress that it is helping you avoid. This is truly one of those situations where a little bit of effort goes a long way.