How to Look After Your Money: An Easy Guide

We have probably all been told the famous saying that “money can’t buy happiness”, but financial insecurity can certainly cause unhappiness, so it is incredibly important to make sure that you learn how to look after your money so you can plan for your financial future.

It doesn’t matter if your current financial situation is looking like a bit of a tangled web of mess and debt, or if you are in a good financial position but you are still looking for a way to be better at managing your money: we have put together this easy yet full guide to help you.

We are about to cover everything you need to know about how to look after your money throughout this article, from how to budget the right way and how to deal with any debt. Are you ready to become a money managing moguel? Then without further ado, let’s get into it!

1. Create a Budget (and Stick to it)

If there is one thing that you should already know about managing money, it is that the best way to get organized and to stay on top of your finances is to create a household budget.

This should include your income and any outgoing expenses that you have, such as your phone bills, gas and electric bills, rent, and anything else that you know is coming out. Then, you will be able to work out how much money you have left to spend on other expenses.

Creating a budget will also require you to take stock of your current financial situation which can be a great way to get a better idea of which spending areas you will need to cut back on.

2. Come Up With a Debt Repayment Plan

The hardest part about looking after your money is if you are already in debt in the first place. This can make it harder to budget, as you will need to factor in repayments.

Sites like Credit Ninja allow you to take out a personal loan and they will often offer much lower interest rates. Because of this, it can sometimes be a good idea for a person who is having financial difficulties to take out a personal loan with reduced rates to clear their debt.

You will then be able to pay back the personal loan, but the total amount that you will need to repay will be much less than if you continued to pay back the original debts at their rates.

3. Try to Save for a Rainy Day

Having an emergency rainy fund will always be useful, even if you never end up using it for an “emergency”. All this means is that you will always have something to fall back on in the event that something unexpected happens and you are forced to rely on your savings.

Try to save up enough to cover around three to six month of expenses (which you should now have a pretty good idea of thanks to creating your budget) so that if you lose your job, for example, or become ill for an extended period of time, you will have enough money to live on for the duration that you are out of work. Think of it a bit like having a safety net.

4. Create Financial Goals to Work Towards

Having a set financial goal that you would like to work towards and one day achieve can be a great way to motivate yourself when it comes to trying to have better money management.

Oh, and try to make them reasonable goals. There is little point in setting yourself the goal of becoming a millionaire before you are 30 years old if you are already 29 with no savings. Don’t be afraid to dream big, but try not to be completely unrealistic with your goals, either.

Instead, set yourself a target of saving $500 that you can put towards a holiday next year, or alternatively, you might want to try and save or put aside enough money that will allow you to start the business you have always dreamed about setting up and running on your own.

5. Set Up the Appropriate Accounts

If you are starting to get serious about your savings, it is worth looking into the different types of savings accounts that are available for you to open as this means you can keep the money that you are able to save in a separate account where it is harder to spend it.

Most people have at least one or two of the following:

• Checking account

• Savings account

• Investment account

These are the foundations that you will need for your financial success. You should also shop around to see which banks are offering the best interest rates for keeping your money with them, as this can vary with some having much better rates than others.

It might not seem like it is all that important now, but if you are planning on paying into an account for the next few years, then even the smallest amount of interest can start to add up.

6. Keep Track of and Monitor Your Finances

Without knowing where you stand when it comes to your current finances, it can be difficult to know how to progress or how to improve your overall financial situation. For that reason, among other things, it is important to try and keep track of and monitor your finances.

This could be as simple as checking your bank statements each month for any discrepancies or to see if there are any specific areas where you are still overspending.

If you are anything like me, this is also a great way to catch any direct debits that you no longer use or need, such as a free trial for a movie subscription that you don’t use anymore.

Final Thoughts

It might seem overwhelming at first, but by following these tips, you will be much better at looking after your money.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes