Personal Money Management Advice
To achieve your financial goals, you need to assess your personal money management activities on an ongoing basis. How you prioritize, spend, save and track your money will make a difference in whether you live a financially healthy lifestyle or spend your days filled with stress from growing credit card debt.
Here are some personal money management tips to help you take control of your financial situation.
- Track your spending. Know where your money is going. Follow every single penny out of your pocket for couple of months. Keeping a log of expenses or using money management software can help you immensely in this process.
When you know what you are spending your money on, you can develop an accurate budget. Also, when you know how you are spending your money, you can figure out where you can cut expenses and save more of what you earn.
Prepare and stick to a budget. Keep your expenses within your income limits. Cut back on big ticket expenses, unless you save for them in advance. And notice how little expenses add up... see if you can live without them.
As noted above, always compare your actual monthly expenses to the amount you put in each budget category. Then adjust accordingly so your spending does not exceed your income. Click here for guidelines on how to create a budget: Budgeting Tips
- Review your budget regularly. Family situations change and priorities change so check your budget on an ongoing basis to ensure it reflects your current circumstances. As noted above, a
- Prioritize expenses.What if an unexpected expense comes along on any given month? See if you can compromise and cut back on something else in its place. Car in trouble? Skip your weekly dinner outing and other "nice to have" spending to foot the new bill this month.
Pay off high interest credit cards. Your ultimate goal is to get rid of credit card debt altogether. Though, as part of your plan to reduce debt, transfer balances to cards with lower interest rates. Click here for more on this and other debt consolidation advice.
- Keep a savings account and contribute to it monthly. Always keep your savings account separate from your checking account.
- Set up automatic monthly transfers from checking account to savings account. Try to reach a point where you can comfortably save at least a 10 percent of your income every month.
- Have an emergency fund. Save money each month to plan for the unexpected. Target having at least four months of net income in your account in case something happens or you lose your job. Use this money strictly for emergencies.
- Have a retirement account and contribute regularly. The majority of people don't have enough money saved when it comes time for retirement. You can't count on Social Security benefits alone to sustain your lifestyle after you stop working.
- Use credit cards only for necessities that you know you can afford in the month. For other purchases, use cash, checks or debit cards.
- Pay off your credit cards in full every month. Don't get in the habit of paying only the minimum amount due. It will cost you dearly in interest and fees. Keep spending to a minimum on your cards (see the bullet point above) and only charge what you know you will be able to pay.
- Find ways to save money in your daily routine. Avoid frequent impulse buying. Always evaluate if you really need something before buying it. Comparison shop for the things you buy, including everything from your weekly groceries to insurance policies... and everything in between.
- Pay all your bills on time. Avoid late fees and damaging your credit rating by sending in payments on schedule each month. Consider automating payments by setting up scheduled payment transfers from your bank account. Then, be sure to track your payments so you always know how much money you have in your account.
- Closely review all monthly bank statements, invoices, and credit card statements. Look for errors and track your income and expenses regularly.
- Review your credit reports every year. Request your credit report annually from all three reporting bureaus. Check to ensure your financial data is up-to-date and accurate.
By law, you can request to see them at no charge once each year. Click here for information on how to request your reports from the reporting agencies EquiFax, Experian and TransUnion: Credit Ratings and Reports
- Always be on the look out for new personal money management tips. Consider new income sources, as well as ways to cut spending and increase saving.
For more personal money management tips, click here: Money Management Advice
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