5 Easy Ways to Take Control of Your Personal Finances | Financial Buzz

5 Easy Ways to Take Control of Your Personal Finances

Learning how to manage your money is an important skill. Too many people leave it to chance and then wonder why they can’t make ends meet or why a sudden increase in prices and the interest rates leaves them in a state of panic. If this sounds like you, here are five easy ways to take control of your personal finances that will keep you in charge and help you to ride out any potential financial storms.

Create a Budget

Ask anyone about taking control of money and they’ll suggest that you make a budget. By creating a monthly spending plan, you can see where your money needs to go, the things you can afford, and things you may need to cut back on. However, many budgets are overly complex and become too difficult to stick to. We suggest that you create a simple budget that details all the bills that must be paid, together with expenditure for groceries and personal spending. Anything left over after all necessary expenses have been met can be divided up between savings and investments.

Be Honest About Your Spending Habits

Most of us spend money we don’t need to or don’t have. We buy things we don’t need, splurge on expensive items that we don’t use and waste small amounts on insignificant purchases. If this sounds like you, it’s time to be honest about your spending habits. Make a note of the things you’re buying that are a waste of money and make a conscious effort to be more careful about what you buy. This doesn’t mean that you can’t spend anything. It’s often better to give yourself an amount of personal spending money each month than try to be very strict. 

Be Prepared for Emergencies

Emergencies happen. That’s why they’re called emergencies. While we can’t foresee every emergency that may come our way, we can plan for the unexpected. Having an emergency fund set aside for those times when the unexpected happens means you won’t have to dip into your savings or use credit to cover it. One way to create an emergency fund is to reduce your monthly expenses and use the extra money to build up your fund. With a student loan refinance option, you can lower the monthly payments on your existing student loan. You may also want to consider selling some household and personal items or working extra hours to add to your emergency fund.

Pay Down Your Debt

Having large financial debts is very stressful, especially if you can’t see a way of paying lenders back any time soon. Plus, just think of all the interest you’ll pay over the years – interest that could be used for savings or investments. One way to pay off your debts is to use the snowball method where you start by prioritizing your smallest debt first. Seeing individual debts disappear will give you the motivation to pay off more than minimum payments each month. Another way to tackle your debt is to prioritize paying off the debt with the largest interest rate first.

Get on the Investment Boat

You may be a little nervous about investing your money, especially when you see how volatile the financial and stock markets can be. However, investing is a long-term strategy and time has shown that if you can ride out the storm, you are likely to make more interest than you would from typical saving schemes. Some providers allow you to start investing with minimum contributions, so you can put your toe into the water until you feel more confident to invest more.

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