(Newswire.net — June 19, 2020) — Americans are spending approximately $18,000 a year on non-essentials. In fact, the average person overspends eight times a month. That’s $315.16 of unnecessary spending when you could save instead.
Don’t flush your hard-earned money down the toilet! Instead, start learning how to manage your money. With these tips for managing your finances, you can start saving for the future.
Keep reading for the 10 tips you need for smarter savings!
1. Start Setting Goals
It’s not enough to cut spending or stash your cash in the bank. Instead, consider making a list of your goals and priorities. Giving yourself reasons to manage your finances will keep you on the right track.
For some, learning how to manage money is attached to a big expense, like a wedding ring. Maybe you want to save up for a car or vacation. Some people learn how to manage money better to get out of debt.
Think about your personal goals every time you feel the itch to spend instead of save. Your goals will keep you motivated and focused on the future. Otherwise, you might end up splurging.
Remember, unnecessary spending will only shove you off track. You’ll slow your progress down, leaving your goals further out of reach. Instead, keep that goal in sight.
Setting your long term goals will give you a reason to manage your money.
2. Know Your Income
What’s your monthly household income? Knowing how much you’re bringing in will inform how much you can spend and how much you should save.
After all, it’s difficult to learn how to manage your money if you don’t know what’s coming in. Check your paycheck and add in any money you make from a side hustle. Then, write that number down.
Once you determine your monthly income, you can use the rest of these tips for managing your finances effectively.
3. Track Expenses
Once you know how much you’re making, it’s easier to determine how much you can spend.
Gather all of your expenses over the next month. Grab your receipts, bills, and try to track how much cash you spend, too.
Then, separate all of your expenses into separate categories. Here’s a breakdown of the frivolous ways Americans spend their money each year (a lot goes to Cheetos). These categories can include:
- Travel
- Transportation (gas and car payments)
- Household expenses (including rent and utilities)
- Food (groceries and eating out)
- Entertainment
- Debts and loans
- Miscellaneous
Where are you spending the most money? Where can you start cutting costs?
Now that you know where all your money is going, you can set an informed budget for yourself.
4. Establish a Budget
Take a look at each of the categories you set in the step above. Now that you know where you’re spending the bulk of your money, you can start managing that money.
First, set a firm budget for each category. Reduce how much you usually spend. Then, you can reserve the money you don’t spend in a savings account.
Make sure to put your savings in a safe place. You can learn more about private family banking with Living Wealth.
Establishing an overall budget and separating that budget into categories will help you better manage your money.
5. Motivate Yourself
Managing your personal finances can seem daunting. If you’re struggling to stick to it, give yourself a little motivation.
First, write down your goals and keep them in a place you’ll see every day. What are you saving up for? Consider creating a vision board with photos as a reminder.
For example, if you’re saving up for a family vacation, post pictures of your destination up alongside your goals. A daily reminder of your goals will keep you motivated.
If you’re still struggling, reevaluate your plan. You might need to adjust your budget after the first month. That’s okay.
Try adjusting how much you’ll spend for each category while keeping your overall budget the same.
6. Minimize Spending
There are many ways you can avoid splurging and unnecessary spending. For example, take a look at how much money you used to spend on food each month. Did you order takeout or eat at restaurants a lot?
Instead, start cooking at home as a family. Establish a menu for the week that repeats the same ingredients for different meals. The next time you go shopping, stick to that list.
You can also cut back on subscriptions like Hulu and Netflix. Evaluate where you’re spending your money and look for ways to cut back.
7. Plan for Emergencies
Sometimes, an emergency can derail your long-term goals. Preparing yourself for an unexpected emergency can help you learn how to manage your money, too.
In addition to your savings account, consider creating a rainy day fund. Save a little to that fund every month.
Many people didn’t expect to lose their jobs when COVID-19 hit. Medical emergencies, funerals, and other surprises could slow your progress, too. By preparing for those financial emergencies, you can manage your money without draining your savings account.
8. Reduce Your Debts
Do you want to get out of debt as one of your goals?
Start looking into ways to lower your interest. You might want to consolidate your loans, too. Working off even one debt can help you better manage your money.
9. Use Cash Instead
If you want to focus on managing your finances, set your credit card aside. Instead, start using cash.
Look back at the budget you set for yourself. Giving yourself a monthly allowance in cash will help you see that budget dwindle down over time. As you start running out of cash, you’ll see how much you’re really spending each week.
10. Remain Consistent
Once you start using these tips for managing your personal finances, stick to it! You might even find methods that work better for you along the way. For example, many people use phone apps to track their spending.
Others use apps like Acorns to invest a little each time they spend.
Once you find a strategy that works for your lifestyle, keep it up!
How to Manage Your Money: 10 Tips for Smart Savings
Ready to learn how to manage your money? Start putting these tips to the test! With a strong money management strategy, you can prepare for the future without worrying.
That little nest egg you save can help for a rainy day, family vacation, or the new car you’re saving for. Remember, saving a little at a time can make all the difference.
Explore the Finance section of our blog for more helpful tips!