Money management includes spending, investing, saving, and even budgeting. So, how can you boost your financial confidence while decreasing your anxiety about your financial goals? One useful strategy could be to learn how to manage your money and mindset more effectively. You could conduct your own research or seek professional advice to assist you with your financial plan.
How to manage your money better
Here are three useful budgeting techniques and financial advice that could serve as a general roadmap for your financial journey:
1. Create a personal budget
One finding from the Capital One Mind Over Money study is that those who are experiencing the effects of financial stress struggle more with budgeting. They tend to spend their paychecks more impulsively and feel less in control of their finances.
Making a budget is a great way to start improving your financial habits and learning how to maximize your resources.
The Consumer Financial Protection Bureau (CFPB) asserts that budgeting “helps ensure that you will have enough money for the things you need and the things you want while still building your savings for future goals.”
You could begin by using a budgeting worksheet and performing the following general actions:
- Add up your monthly income. This includes any additional income you may have, such as bonuses, tax refunds, or earnings from side jobs, in addition to your job’s salary.
- Add up all of your monthly expenses. These can include costs associated with the main “buckets,” such as covering the cost of living, purchasing food, repaying student loans, and traveling. You could use an average from prior months for monthly payments like food and utility bills that are not always the same.
- Calculate your income after deducting your costs. This sum will serve as the basis for your budget. When paying off debt and accruing savings, you have to make do with whatever is left over. If you have not already, you might want to think about reducing expenses for things like takeout food and subscriptions if what is left is too little.
- It might be beneficial to consider your budget as a living document that you consult frequently. In this manner, you can make changes if necessary, such as when you stop paying a monthly expense by paying off a credit card. When making your budget, you may want to take into account well-liked budgeting strategies like the 50/30/20 rule.
2. Track your spending
According to the Capital One Mind Over Money study, having sound financial practices when you are feeling in control of your finances can be beneficial when times get tough.
One of those beneficial routines might be keeping track of your spending. After all, it might aid in your efforts to maintain your spending limits and avoid going overboard.
What system do you use to monitor your spending? It’s simple. You could use one of the many online apps to digitally track your spending.
If you have a Capital One card, you could use the free digital features that help you track your money. Alternatively, if you would rather keep track of things on paper, you could just save your receipts and keep a planner or notebook handy.
One tip: It might be a good idea to categorize your expenses. You will be able to clearly see where your money is going and whether you are overspending anywhere.
3. Save for emergencies
You might feel better about your financial situation if you save money in an emergency fund for unforeseen life events, such as the requirement for significant home repairs.
Perhaps one of your financial objectives is indeed to increase your savings. If so, you might want to think about these money advice tips to help with unforeseen costs:
- Keep in mind that interest rates can change. So it may be wise to shop around. If you find a better-paying savings account, the extra interest can add up over time.
- Add additional funds to your account. Consider depositing any bonus or tax refund you receive from your employer into your bank account. Your savings can increase with the additional funds.
- Instead of purchasing what you want, consider what you actually need. In this manner, you can use the remaining funds to fund your savings.
- Automate your savings. You might be able to set up automatic transfers to your savings account with the assistance of your employer in order to increase your savings without giving in to the urge to spend more money.
Conclusion
Keep in mind that good money management skills take time to develop and are more than just being on the road to financial independence. After all, how you manage your money is more important than how much you earn.
