The world of finance is unknown to many people, until the day comes when bills start to flood through the letterbox. When it comes to personal finance, this is no exception. It is something people avoid, as it is mostly quite complicated and difficult to understand, but this can make managing personal finances a trickier task than it needs to be. If you are unsure of where to start on your journey to managing your finances successfully, then it’s always a good idea to follow a resource of trusted tips, which will make it easier for you to understand and manage your finances better.
Make a daily budget
Breaking finances down into bitesize chunks is the best way to get a greater understanding of your money. Although having a monthly budget is a good place to start, you can further track your spending and incoming paychecks if you make a small daily budget. This can include any money you might have to spend on food, money spent on bills, as well as any spare cash that you can add on to make your budget a little bigger. At the end of the month, you can see which days you spent more on, and which you saved on, which will help you to balance your books as time goes on.
Track any expenses
Sometimes, it is easy to forget what you have spent your money on. You can make a daily budget to set everything against, but there will be hidden costs and outgoings which can affect your budget without you realizing. Every day, log into your online banking to see if any small costs have cropped up, and make a note of them in your daily budget. This will make you more aware of what costs add up, and which ones are one-offs.
When you get your paycheck at the end of every week or month, it’s easy to throw it away once you have gathered how much you have earned. Often, paychecks will come with pay stubs, which have much more important information on them than just your earnings. For example, any tax deductions, retirement fund contributions, and previous debt payments, all of which you can learn more about when you realize why pay stubs are essential to managing your personal finances.
Save spare change
This is one of the oldest tricks in the book, but it is one that has helped many struggling families in their times of need, as well as certain individuals. Having a small pot in your home where you can put any change from your pocket will help you pay for any food on days where your bank won’t stretch to it, or will help you save up for a vacation to a new place. If you want to make even more cash on the side, you can always sell your unwanted items online or at a yard sale, which are also a fun way of spending your time.
Have separate accounts
If you are living with someone and have a joint bank account, then this can make it more difficult to keep track of any spending. Although for some couples it is essential, if you can, try and avoid staying on the same account, as you might not know where your other half’s money is going. If you are single, then you can always sign up to another smaller bank account to help manage larger sums of money, and you can use one to put your savings in, while the other acts as the one outgoing payments are tied to.
Pay off your credit card often
Credit cards can be the downfall of many people’s personal finances, due to the generous lending limits banks allow, and the harsh interest rates that follow if such spending isn’t paid off in time. However, having a credit card is essential if you need a credit rating, which will help you access many areas of life, like buying a house. The best thing to do is to set yourself a limit each month of how much you can spend on your credit card, which you should then pay off at the end of every month. Getting into this practice will ensure you don’t have to pay any interest rates off, but also it will put you in good stead if you need a loan at any point in your future.
Make good investments
The world of investment is one that confuses people who aren’t working and living in it, but that doesn’t mean you can’t invest small amounts of money for a great return if you follow the basics. Rather than throwing large amounts of money at risky investments, it’s a good idea to put some money aside each month to invest in a steady company, which won’t affect you if you lose it, but will be a nice bonus if you get any return on it.
Have an emergency fund
What usually stops people from achieving financial harmony is when emergencies come along that they haven’t accounted for. Although it is impossible to budget for every problem that could arise, it is always wise to have a backup fund in case anything was to go wrong. This could be in case your medical bill runs high once a month, or if your energy bills have spiked during the winter months. Having such a fund means you won’t have to eat into your personal savings, which could affect your future.
Whether it is health insurance, life insurance, or pet insurance, the list is endless, but it is recommended that you take out a trusted insurance policy in the event of an emergency. Not only will this keep any nasty surprise bills on the low, but it will prepare you and your family on the off chance a disaster was to happen. It may seem like a large cost in the long run, but it is much better than having to pay a huge sum of money upfront when you can’t afford it.