When it comes to putting yourself in the best financial situation possible and having your personal finances under control, effective money management is vital. Are you aware of your outgoings? What about your credit score? Are you keeping track of your debt? These are all critical factors to be aware of to become a money management superstar.
Even though exceptional financial skills aren’t always required to manage your money better, we could all do with a few little hints to help us stay in control of our finances. To that end, the following are our top four ways to manage your money efficiently in 2021.
Step 1: Budgeting Better
Even though you might not think a budget is necessary, or that it might be a tedious approach to managing your money, it’s incredibly useful. Knowing the source of your money, or where your money comes from, and where your money is being spent are two key parts of budgeting better.
Knowing where your money is going, for instance, requires you to audit your expenses. You’ll want to consider your essential outgoings, such as your bills and rent, and think about your ‘not-so-essential’ outgoings – such as the money you spend on treating yourself. Keeping track of these two factors is key to your budget, as is keeping it updated with your expenses. This way, you’ll find it simpler to keep track of your money.
Step 2: Look For Discounts Where Possible
Spending what you can afford to spend is crucial to managing your money better. This is where looking for discounts and paying the perfect price for services and products is ideal. By looking for discounts on services and reduced prices or sales for the products you’d like to purchase, you can keep your expenses lower.
Coupons are also another way to take advantage of discounts. So, instead of throwing them away, you might want to keep hold of your coupons to ensure you’re always paying the ideal price for your products.
We’re not saying that you should never treat yourself. But it’s essential to be careful when it comes to spending money that you don’t have. Look for different ways to treat yourself and try to stop spending.
Step 3: Keep Track Of Your Liabilities
Going back to the importance of a good credit score, you’ll want to keep an eye on the number of loans you’ve taken out. The ideal way to do this is to review all of your loans – your credit cards, car loans and home loans, for example, and record your outgoings on an Excel spreadsheet.
Keeping your monthly outgoings low – in terms of your loans – is important, especially if you can’t afford the monthly repayments. That’s because, even if your bank has approved your application for a loan in the first place, you might find it a challenge to keep up the monthly repayments if you have other obligations.
Step 4: Save, Save And Save, And Use A Savings Account
The final step in managing your money better is to save as much as you can. If you’ve had your eye on a flashy product, what’s the best way to buy it? Instead of purchasing with a credit card, for example, be sure to save beforehand and build up your money until you’re sure you can afford it.
Ultimately, your vital outgoings such as your bills, home loans or rent are more important than a flashy product. No matter how much you want it, it’s always better to try to save as much as possible and purchase that product when you’ve got the money together.
How do savings accounts come into this? They’re instrumental and can reinforce your saving efforts in various ways. Not only can you make instant, automatic transfers between your checking and savings account, but you’ll also be able to monitor your savings, set the amount you’d like to save each month, and make regular deposits.
Manage Your Money With Ease: Key Points To Remember
Even though managing money might seem like a challenge, you can make the task simpler by:
- Creating and sticking to a budget
- Keeping an eye out for discounts, coupons, and sales
- Staying on top of your outgoings and liabilities, and
- Regularly putting a percentage of your money into a savings account
With these key steps, you’ll soon become a money managing pro and you’ll start to see your money grow in no time.