Financial literacy is a skill not often introduced to kids. Somehow parents believe that their children will eventually figure out how to manage money when they grow up. Just like values, financial habits are set at an early age. Sadly, most parents also do not have capability to educate their children about money and oftentimes find themselves in a financial rut. Knowledge in money management and budgeting determine how soon you can be financially independent. Whether you are just starting a career or nearing retirement, it is not too early or too late to know these money management tips to get you out of financial trouble.
Make a list of the "must-set aside money" for these expenses
We all have needs and wants. If you do not have a list of the expenses that should be prioritized, you will not notice that you are spending more on your wants instead of your needs. Stop overspending on things you not really need. When you are on a tight budget, you don't have to fulfill every item on your wants list. Make the most of your income by changing your spending pattern.
Change your savings equation
You were probably introduced to the equation that whatever is left from your income after you spend them on your expenses should go to your savings fund. Wouldn't it be nicer if you will already set a certain amount or a percentage of your income that will go directly to savings? By doing this, you will notice that it is easier to give up small expenses like frequent food deliveries for midnight snacking or buying too much clothes that you just use once and clutter your closet.
Reduce your debt
Having a credit card or a personal loan is not bad at all. But if your credit card debt is piling up and you are not paying off your loan, you will find yourself in an overwhelming debt situation. Also, you will suffer from bad credit rating. If you have outstanding balances on multiple credit cards, analyze which among your debts should you pay first. You can either choose the one you can afford to pay in full or choose the one that charges the highest interest rate and make sure you pay at least the minimum required payment.
Look for a loan that charges a lower interest rate and borrow an amount that will help you eliminate your credit card debts that have higher rates. Having a bad credit rating makes it extremely challenging to find a lender but not impossible. Small loan for people with bad credit can be availed at creditloan.com and you can have the fund within 24 hours.
Build an emergency fund
Depending on how much you can set aside, you can utilize your savings as your emergency fund or you can have a different amount allocated to build the emergency fund. Ideally, a fund that could cover 3 months worth of expenses is sufficient. But the recent pandemic has locked us for more than two years already and it is still unclear when everything will be back to normal. Therefore, never stop building the fund and consistently pour money into it.
The pandemic has brought a worldwide economic crisis. As expected, the poorest countries suffered the most but the first world economies are also badly affected. While the government is doing it's best to keep everybody afloat, it is inevitable that there are millions of citizens who are up to now struggling to put food on the table. It is better to let go of unhealthy spending habits and focus on being ready for unexpected expenses. Knowing you can dig up something from the pocket will save you from suffering from financial anxiety.
Money management requires discipline. As long as you track where your money goes, you will always be able to stay in control of your finances.