Did you know that only 18 percent of high school students in the United States are required to take and pass a finance course?
Financial management is vital for saving money and organizing your finances. This is true whether it is personal finance or within a business. Despite the importance of learning money management, few schools require it.
Thankfully you’ve come to the right place to learn about how to save money and how to go about managing finances. This will prove useful in the future and allow you to build up wealth through savings and investments.
Continue reading to learn more about money management and the best ways to optimize your money.
1. Track Your Spending
If you’re going to successfully manage your finances it is vital to know what you’re spending on and where your money is going on a monthly basis. If you’re unable to keep track of that then it is a sign that your spending habits need to improve.
Spending awareness is a huge part of great financial management. If you don’t want to keep track of your spending manually there are great apps available for both Android and Apple devices that will help you keep track of how much you spend each month.
These apps will even categorize what you’re spending your money on. This makes it much easier for you to determine whether you’re spending on non-essential things.
Some non-essential things might be dining out, entertainment, and clothes shopping. By educating yourself on where you’re spending your money you can make a plan to start improving and saving money.
2. Learn Self Control
It may sound difficult to curb your interest in immediate gratification, but your money management will thank you for it. While it is possible to buy the things you want on credit, it is a much wiser move to wait until you have the money saved to make that purchase.
By not learning self-control, you can end up piling up massive amounts of credit card debt with accruing interest. This means you might be paying for the things you purchased for years.
Credit cards definitely have benefits when you are able to pay your credit card bills on time and build up good credit, but don’t use one unless you can pay the whole balance of what you owe.
3. Determine Your Monthly Earnings
It is much easier to save money and organize your finances when you know the amount of money you’re earning each month. The best way to start is by determining how much money you’re bringing after taxes.
This is an easier task if you’re a salaried employee but it is still manageable if you’re not. It is a little more tricky if you’re a freelancer with no definite idea of your earnings from month to month.
Use these Rich Dad Poor Dad Quotes to inspire your financial management and start saving money by organizing your finances.
4. Make a Financial Management Plan
Now that you’re aware of what you’re spending and what you’re earning each month you’re well on your way towards great financial management.
The next step is to come up with a plan based on your interests and the things you enjoy in life. When looking at where you’re spending your money when you create your budget you can decide which things are important to you that you don’t cut out.
Depending on your budget, keeping those expenses in there means that you’ll have to cut expenses elsewhere. This might mean dining out less and shopping at a discount grocery store instead of a more expensive alternative.
Another great idea is to set up an auto-deposit savings account that acts as your emergency fund should anything go wrong. By using that method, the money that goes into the emergency fund disappears into the savings account before you can count it or access it.
5. Save Early and Often
This is one of the most important tips when it comes to great financial management. By saving early you’re able to accrue interest on the money that you’ve made. You don’t need an investment account in order to gain interest on your money.
Most savings accounts allow you to build interest on your money that you have deposited. This also means that there is no risk of losing your money like you would if you put it in a brokerage account.
This rule also applied to retirement funds like 401k and IRAs. The sooner you invest money into them, the sooner it will grow by leaps and bounds.
6. Expect Emergencies
Unfortunately, accidents and emergencies happen. It is important to have liquid capital ready for when they occur. A good rule of thumb is to have about three months’ worth of expenses saved for when emergencies happen.
It could be a medical emergency or maybe you lose your job. Having money to deal with those problems will make it a much less stressful experience for you.
7. Cut Back on Recurring Charges
Another great way to save money is to look at the recurring charges that you have. If you subscribe to services that have recurring charges like Netflix then it is possible that you have quite a large amount of your monthly earnings disappearing.
It is easy to forget about those services that have monthly recurring fees and charges, but they add up quickly. Go through the services you subscribe to and evaluate which ones you need. Get rid of the ones that you don’t.
By canceling these unnecessary apps you’ll end up saving a lot of money that you possibly didn’t know you were losing each month.
Take Charge of Your Financial Management Today
When it comes to financial management, there are a lot of steps available to take that will help you save money. From little things like cutting back on services that have recurring charges to big things like saving money for emergencies, organizing finances is crucial.
For more great and informative articles about business and finance be sure to explore more of our blog.