Money is one of life’s consistencies, but it can also evoke a wide range of different emotions. With the rising cost of living and the looming effects of the recession, many people are looking at how to better manage their personal finances.
It’s important that, if you are worried about managing your finances, you don’t let that stop you from being intentional about how you look after your finances. You should look to approach money management in a strategic and informed way so that you can better track your spending and manage debt.
Managing your finances involves budgeting, spending and saving and how you use credit or pay off debts. Finding ways in which you can better manage your finances can have overall positive effects on your money management and help reduce any levels of stress or anxiety you feel about managing your finances. Let’s take a look at how you can better manage your personal finances and how this can help you in the long run.
Personal finance is a term which applies to how you manage your money, as well as how you approach saving and investing. Personal finance involves everything from budgeting and insurance to banking and mortgages and refers to the entire financial industry.
Your individual financial goals and desires - and the plan you have to achieve these - can also impact how you approach different financial situations and opportunities. To make the very most of your income and savings, you must look to become more financially aware as this can help you to distinguish between good and bad advice and make better informed financial decisions.
Tracking your spending can help you to better manage your finances and avoid overspending. Sticking to healthy money habits, such as budgeting, when you are feeling confident about your finances, can help you to better follow these limits when times become more challenging.
Tracking your spending doesn’t need to be complicated. You can record your ingoings and outgoings digitally with one of the many budgeting apps - some banks even offer it as part of their online banking service. If you prefer a non-digital option, then you can simply keep track of everything in a notebook. It might also be good to separate your expenses into different categories. By doing this, you can see exactly where your money is going, and the areas where you may be spending too much, such as on food expenses.
Making sure you have money put aside for emergencies, such as unexpected life events including car repairs, vet bills or private medical care, can all help you to better manage your personal finances and make sure that, when the unexpected happens, you can easily cover it without too much worry. Before you start saving for emergencies, there are a couple of things to remember:
Remember that interest rates can vary: when looking to set up any type of savings account, it’s important to note that interest rates can vary so it is important to shop around. If you find an account that has a better rate, then you can save more with the interest rate over time.
Add any extra income: if you ever get unexpected income, such as a tax rebate, company bonus or interest, then you should look to deposit this money into your savings account to give your emergency savings fund a boost.
Set up automatic saving transfers: if you have to manually transfer money from your current account into your savings account, then you might find yourself second-guessing making the transfer, particularly if you are having a month where you are short on money.
Instead, set up automatic transfers from your account into your savings, so that it sorts itself out without you having to do anything. This way, the money will still be there when and if you need it, without you being tempted to use it for non-emergencies.
Paying off debts, or making a plan to pay them off, can help you to better manage your finances over time. One of the simplest ways to avoid getting into debt is to avoid spending more than you earn to keep your debt from getting out of hand. But, it’s also important to note that most people will have to borrow money from time to time, depending on their financial situation.
In some instances, taking out debts can be seen as a good type of debt, such as obtaining a mortgage or getting a car on finance. However, managing debt can feel hugely debilitating, especially when dealing with larger amounts or bad types of debt. There are many different ways in which you can look to manage debt, but it’s always worth speaking to a financial debt advisor who can help you with the best approach for your personal circumstances.
