Money can be a source of stress or a means to a fulfilling life. It all depends on how you manage your finances. It’s important to be intentional with money management and budgeting. Below are five tips to help you manage your money wisely.
Track your finances
Tracking finances is a great way to take control of your money and initiate a path towards financial success. As they say, knowledge is power, so how are you ever going to manage your finances wisely if you don’t know where you currently stand? There are many resources that will create a spreadsheet for you or you can simply create one of your own. You need to know how much money is coming in and how much money is going out. Even if you just jot this information down in a notebook, that’s better than not knowing at all. The information may surprise you. You may be spending much more than you realize or you may be spending less and can allocate money to other places like savings and investments. Either way, you will never make progress unless you start tracking where all of your money is going. Each and every dollar should have a job.
Save for the short-term
Many people focus on saving for the long-term but in reality, it’s best to see savings as a short-term scenario. For instance, you always want to have an emergency fund in case something unplanned happens that you need to pay for immediately. With that being said, these savings accounts are not only for stressful events. It’s also wise to create short-term savings goals for things like trips or a large purchase. This is easy to do with the right formula. If there is a large purchase you want to buy or an approximate amount you want to spend on a trip, divide that into how many months you have and see how much money you need to save on a monthly basis to reach your end goal. Most of us can reallocate our money to where we have at least a small amount that we can save each month. Even saving something as small as $50 a month will feel motivating.
Invest for the long-term
Investing gives your money the opportunity to outpace inflation and increase in value. Investments are a long-term security that will benefit you for many years to come. This may look like stocks, bonds or real estate. People invest in all types of ways. People sometimes talk about savings and investments interchangeably, but they are very different things. As long as you have enough savings for an immediate emergency, then the rest of your additional income should be allocated towards investments. Think of it as saving for the future.
Use credit wisely
Having solid credit is extremely important whenever applying for a loan, whether that be car, personal or home. People should work hard to build a good credit score but also to maintain it. Be careful about too many hard credit checks as well as scarring your credit score by making poor choices such as paying credit cards late. In the long run, holding a solid credit will significantly benefit your finances in every way.
Secure a reasonable vehicle payment
There is no reason you should have a high monthly vehicle payment. Numerous banks are offering low interest rates and refinancing on car loans, with some even offering rewards. For instance, Champion Credit Union is offering up to $1000 cash back when you refinance your car loan with them. With this $1,000, you can do whatever you want. Circling back around to some of the earlier suggestions, this extra cash may be just what you need to open an investment account or start a savings account for an upcoming dream vacation.
For more information on how to manage your finances, please visit championcu.com/take-control-of-your-budget.