Was one of your New Year’s resolutions to improve your financial situation? If so, you’re probably not alone.
Right now, only about 39% of Americans have enough in savings to cover a $1,000 emergency. That’s a scary thought and can lead to a lot of unwanted stress.
If you’re in this boat, there are ways to get out. By learning how to be smart with money, you can make 2019 a year of new opportunities.
To help you out, we’re going over eight tips for better financial management.
1. Prepare for the Future
Life changes often mean changes to your financial situation as well. These could be necessities like a new car or simple lifestyle changes. Regardless of what they are, it doesn’t hurt to start planning now.
If you know you’ll need to make a big purchase in the next few months, start going over your finance options in advance. You can then start putting a little extra away beforehand.
Preparing for future obligations is a great idea as tax season approaches. Determine what you’ll get back as a tax rebate and make plans for that money before you have it. This will help you avoid spending your tax return irresponsibly.
2. Don’t Commit to New Bills
In order to get your financial situation under control, you need to set limits on your outgoings. You can’t do this if you’re adding to your monthly bills.
Getting a new credit card may seem like an attractive option when you’re in a bind. However, just because you qualify for a low-interest card doesn’t mean it’s a good idea.
Even small bills like that streaming TV or music app you really want can start adding up. It’s better to do without these luxuries for the time being.
For necessary purchases such as appliances, opt for paying cash for used items rather than financing new ones. This will pay off in the long run.
3. Save for Larger Purchases
Many people get enticed by the prospect of making attractive purchases with a credit card. Sure, it feels good to get something you want, but it could end up hurting you.
Instead of jumping the gun on expensive items, start saving for them instead. Holding off for several months means you can pay cash and not go further into debt.
This tactic goes hand-in-hand with keeping your monthly bills under control. Paying cash for larger purchases helps avoid higher monthly credit card bills.
Saving for an item and buying it when it makes sense will also cause you to value the item much more.
4. A Strict Budget
Creating and sticking to a budget is one of the most important practices when improving your financial situation. The great part is, it’s easy to do.
Although you can keep track of your bills, checking account, and credit cards digitally, maintaining a separate budget is crucial. Start a running spreadsheet you can refer to each month.
Include every outgoing expense in your budget. Be as thorough as possible.
Add up your outgoings every month to determine what you have left over. If it isn’t much, it’s time to start making some cuts.
Ask yourself what’s a luxury and what’s essential and start making adjustments. If you end up having a lot left over at the end of the month, allocate a portion to go into savings.
5. Take Advantage of Automation
There are now many ways to manage your money digitally. Use this technology to your advantage.
If you find you have money left over each month, set up an automatic transfer that puts a small amount into savings. Pretty soon you’ll forget it’s even happening and before you know it you’ll have an extra $1,000.
You can also set up alerts so you don’t miss a credit card payment or accidentally overdraft your checking account. These tools will help you avoid costly fees that could hurt your credit.
6. Pay Off Your Credit Cards
Outstanding credit card debt is the reason many people can’t get on top of their finances. If you’re only paying the minimum balance each month, you’re only paying the interest on your card.
Get control of this by allocating a small amount to go towards paying off your card each month. It may take a while, but the more you pay off your balance, the lower your minimum payment will get.
It’s important to note that credit cards aren’t altogether bad. They can be great tools when used correctly.
There are plenty of unsecured credit cards for bad credit if you have a stain on your financial history. Just remember to pay them off quickly.
7. Control Your Impulses
Many people get into serious financial trouble because they can’t control their spending. This is more of a problem today, as online shopping presents us with so many enticing deals.
If you’re going to get control of your finances, you need to get control of your urges. It’s time to stop browsing your favorite online shops until things are more stable.
If you tend to go nuts at the grocery store, make a list of necessities every time you go. It may surprise you how much you save by sticking to your list.
8. Start Investing
If you’re doing okay at the end of every month but feel like you’re still treading water, investing could open the door to new opportunities. The great part is, you don’t need a lot of cash to start doing this.
The most important aspect of investing is doing your research first. You need to determine what type of investment is right for you.
Investing in property is a great way to build equity and can lead to big returns if you plan on selling down the road. You should also look into mutual funds, bonds, and retirement investing to help secure your future.
Learn How to Be Smart With Money Today
When it comes to your finances, there’s no better time than today to take control. The quicker you start saving, the easier it will become in the future.
Use these tips on how to be smart with money and make 2019 a year of financial freedom.
Check out more articles for life hacks and achieving your short and long-term goals.