Managing your finances can be one of the most important and difficult things to do, especially in today’s failing economy. People are losing their jobs, losing their homes, and going bankrupt at an alarming rate. Here are 5 tips to get you started with managing your finances and your future.
1. Set Goals
Setting realistic goals is the first step to managing your finances. Every person will have different goals. Perhaps it is saving up for a down payment on a house, a vacation, your child’s education, or a high end home entertainment system. Maybe you are trying to pay off your credit card debt, or pay down your mortgage earlier.
While setting your goals, remember to be as specific as possible and keep it realistic. Saving up $ 20,000 for a down payment on a new house in one year will be impossible if you are only making $ 50,000.
2. Create a Budget
You will hear it time and time again, but a budget is the most important tool to managing your finances. Make sure that you incorporated your goals into the budget and leave some breathing room. It will be more difficult to stick to your budget if an unplanned purchase of $ 10 brings you over-budget.
3. Use Available Tools
There are many available tools out there to help you manage and keep track of your finances. Use online banking so that you can check your account frequently. Use software such as Quicken, Microsoft Money, or even Excel to create your budget and keep track of expenses.
This is especially important when you are starting out. Hold on to all receipts, write down all transactions in your check register (including cash transactions) or keep track of them in finance management software. Categorize all of the items and keep track of your spending in each category. Evaluate your budget several times a week to make sure you are still on track.
5. Anticipate Emergencies
Nothing can blow a budget faster than emerging. Make sure that you have enough money saved up for some common emergencies that may occur, such as a problem with your car or insurance deductibles or hospital bills. If you do not have to use a credit card or loan to pay for these things you are much better off.
Managing your finances can be an intimidating job. However it is the most important aspect of maintaining your happiness and lifestyle. With these simple tips you can manage your finances and prepare for your future.