We all worry about our finances and our financial security. We worry constantly about ensuring that we have enough to get by each month, to afford the things we want and need, and to be able to live the lives we want.
For many of us, managing our finances is not easy, but helpful money principles are not taught to us in school, so it is hard to know where to begin when we decide to start managing our money better.
We often end up in a position where we end up taking out loans we do not need to. Many people will start filling their browsers with phrases such as personal loans in Oregon. Yet, if we manage our money in a smarter way, we may not have to.
There are several things you can do for your finances that will help make the most of your money, and make it stretch further.
Admittedly, many of us are not always financially the best organizers. We sometimes make bad choices, or unwise decisions, and buy things we do not necessarily need.
Financial management is the most important thing to do to not be constantly worried about money. It is a matter of forming a new habit, one that is focused on maintaining our finances and managing ourselves, and our spending habits, better.
We are all guilty of messing up here and there, but financial management ensures that these mess-ups happen less frequently, and that when they do happen, they do not interfere with our long term financial security.
Here are five things that you can do that will positively impact your financial health
One of the best things that you can do to improve your financial health is to start off by budgeting. Take a look at your income versus outgoing cash. See where you are spending.
If you are spending more than you earn then this is a problem you will need to address promptly. It will help greatly to look at your income and work out how much you actually have that you can spend on rent, utilities, groceries, and other necessities for living.
Once you have calculated how much you have left over after paying the necessary bills, figure out how much you need to pay toward your debts, if you have any, and also how much you are able to save.
At this point you can use the budget ratios 70/20/10 or 50/30/20, which correspond to the percentages you can spend on living expenses/ savings/ debts. Although it can vary depending on how much debt you have. These numbers are not set in stone but are guidelines you can work with.
Do not forget to set aside a section of your budget for leisure as well. Setting aside leisure money will help you to feel less tempted to spend frivolously since you'll know there is money earmarked specifically for you to spend on things you want.
It's important for you to be able to manage your debt. This means paying off any debts you have at the moment. If you have multiple debts, you may want to consider a personal debt consolidation loan to streamline your debts into one easy payment.
If you do not have any debts, then your key goal should be to stay out of accumulating any debts in the future. Debt will drag your finances down, and prevent you from having the additional financial freedom that being debt-free provides.
Consider putting more money into savings if you don't have debts to pay, or you could also spend more on leisure, or any other category that has a limited amount budgeted. But try to avoid getting into debt if you can. Of course, this does not include mortgages, student loans and so on, which are typically unavoidable debts, and debts that are also investments.
Setting goals is a key aspect of financial planning. Goals will help motivate you into your future. A goal can be as simple as saving for a vacation, to buy a house, go to college, or even something as simple as having a certain amount in savings as a back-up.
Goals will define how you work with your finances, and will start to make your money work for you more.
We have mentioned savings a lot, but they are more important than you may think. Savings are not just a rainy day fund, or to save up for particular goals in your future. Having savings can act as a fallback in times of financial distress.
For example, say you are hit with an unexpected emergency. If you have savings, you may be able to cover the costs out of your emergency fund. This in turn could stop you from having to take out a loan, thus protecting you from falling into debt.
Always think before you make purchases, especially big ones. Do the calculations when you consider making a big purchase, taking into account how it will affect your finances now, as well as in the future.
This means you need to consider how a big purchase may impact you if an emergency occurs; will you still have enough to prevent you from taking out a loan?
Consider also the potential long-term complications of making a big purchase. It's important to weigh out a variety of possible future scenarios as well, as this is where our financial decisions tend to have the biggest impact.
All of these tips fall under being mindful with your money, considering how your financial decisions today will not only impact you now, but also later on, and understanding that no decision made will come without consequence.
Sometimes these consequences will benefit us, and sometimes they will punish us. We need to ensure that any repercussions of our actions will benefit us financially in the future, and will not lead to problems and potential debt.
Budgeting and planning ahead are the cornerstones of ensuring that you will be financially better off now than you were before. Automating payments, and knowing how much you have at all times are some of the smartest ways you can ensure your financial security long-term.
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