20 Ways to Take Control of Your Finances

Whether you're stuck in a cycle of debt, earning very little to maintain your desired standard of living, or just want to start saving for an important financial goal like buying a home or investing, you may need help reaching your goals. Follow these strategies to take control of your finances now.

Read Books About Personal Finance

If you need help with your finances but don't know where to start, seek financial wisdom in books written by experts. There are many books on how to take control of your finances, from getting out of debt to building an investment portfolio. Books are a great way to change your approach to money management. To increase your savings, you can buy used financial books online or borrow them for free at your local library. Consider audiobooks if you prefer ear advice.

Start Budgeting

If you are having difficulty managing your finances, you will probably need to create a budget, a plan for how you spend your money each month, based on how much you normally earn and spend.

A budget is your best tool to change your financial future. To get started, list your income and all of your expenses, and then subtract the expenses from the income to determine your discretionary expenses.

At the beginning of each month, establish a budget to allocate how discretionary funds are spent. Track your expenses throughout the month, and at the end of the month determine if you've met your budget.

If you've spent more than you earned, you can set your budget by eliminating unnecessary expenses or, if possible, earning more. Implement the revised budget next month to begin living within your means.

Reduce Monthly Bills

One of the easiest things you can do to take control of your finances is to reduce your monthly expenses. While you may not be able to cut certain fixed expenses, like rent or car payments, without drastically altering your lifestyle, you can cut down on variable expenses like clothing or entertainment by being flexible and thinking frugally.

You can, for example, reduce your electricity usage to lower your utility costs, choose different providers for your home or life insurance, or buy discounted groceries at wholesale stores.

Cancel Cable

Speaking of cutting monthly bills, there is probably one bill you could cut right now and potentially save hundreds of dollars each month: your cable bill. If you need a little help with your finances or just want to reach your financial goals faster, consider cutting the wires.

You don't even have to give up television entirely. "Cutting the cable," meaning eliminating expensive cable services in favor of low-cost streaming services like Netflix and Hulu, lets you watch the shows you love without spending a ton per month.

If, after reviewing various streaming options, you're still determined to stick with your cable provider, switch to a cable package with fewer channels to save a little money each month.

Stop Eating Out

Looking for an easy way to keep track of your variable expenses every month? Control your habit of eating out. The occasional fanfare at a good restaurant is fine, but the savings can be increased if you start cooking at home or bring packed snacks to work instead of eating out every day.

Start small by cooking at home at least once a week. Next week, start packing your lunches to work. You may be surprised how much you can save. With the brown bag, you can save $ 1,300 a year or more than $ 50,000 over a 40-year career.

Plan a Monthly Menu

If you don't like the idea of ​​cooking every night, plan a monthly menu to make it less intimidating. The advantage of planning your meals for the whole month is that you can chop your food or prepare it in batches.

This approach also makes food shopping easier and ensures that you waste less food because you will likely use all the ingredients you buy while they are still fresh.

An alternative is to use a menu planning service like eMeals or PlateJoy to reduce the effort of shopping and cooking. These services allow you to choose recipes and have a list of necessary ingredients sent to your local grocery store for quick pickup.

However, these services cost money, so you will need to evaluate the cost and determine if it fits your budget.

Pay Off Your Debt

One of the costliest mistakes you can make is getting into too much debt, especially high-interest credit card debt. If you want to change your financial picture and get more financial opportunities, save your debt as soon as possible.

Start by listing all of your current debt, whether it's credit card debt, student loan, or auto loan, and find the minimum amount you owe to keep up with each one.

Simply paying the minimum amount won't get you out of debt quickly, so evaluate your fixed expenses and determine how much of your discretionary spending budget you can allocate toward debt repayment.

Try lowering the interest rate on your debt by asking the issuer for a lower rate, consolidating multiple debts into one, or transferring the high-interest debt to a low-interest credit card, such as a balance transfer card.

Then, establish a debt repayment plan and adopt good spending habits to pay off debt as quickly as possible.

Stop Using Your Credit Cards

If you have a hard time making ends meet each month, you may be overly reliant on your credit cards. If you continue to use your credit cards as a stopgap measure to make ends meet, you will quickly run into debt.

This will limit the amount of money you have each month to pay bills, save for retirement, or work toward another financial goal.

If you really want to control your finances, stop using your credit cards. In addition to setting a budget so you don't have to buy things on credit, switch to cash or a debit card so you don't accumulate more debt; open a short-term savings account and withdraw money from it for large expenses; Or leave your credit card at home so you won't be tempted to pull it out of your pocket and swipe it.

Manage Your Student Loans

Your student loans can burden you with debt for years if you are not proactive in repaying them. If you need to refinance or consolidate them, see if you qualify for a student loan forgiveness program or add them to your debt repayment plan. Getting control of your student loans is a great step to take now to improve your finances.

You also don't need to drastically adjust your loan repayment schedule; By paying off half of your student loan every two weeks, you will make an additional payment in full each year.

Some lenders even lower your interest rate by as much as 0.25% when you apply for automatic loan payments.

Start Saving Each Week

Like investing, saving is another passive approach to increasing your wealth, albeit more gradually. To take control of your finances right now, open and direct the money to interest-bearing savings account on a regular basis (every week, month, or a certain time of year, for example).

It could be the money you save in your food budget each month, a tax refund, a fixed amount that you set aside from each paycheck, or an amount that you have allocated in your budget to save each month.

Regardless of which option you choose and how little you save, look for ways to increase your savings over time. Small gains equate to big gains in the long run.

Go on a Spending Fast

Another way to help you control your spending and get your finances in order is to spend fast, which is when you stop spending discretionary money for a set period of time.

Often times, these are one-month expense reduction periods that make exceptions only for essential expense categories, such as food, transportation, and recurring bills.

If you're willing to live like a minimalist for a short time, take on the challenge of filling your checking account, changing your habits, and evaluating what you need rather than just what you want. The experience can even permanently improve your money vision.

Set Up a Financial Plan

A financial plan is essential to take control of your finances and achieve specific goals. In short, a financial plan is a calendar for the big milestones in your life. It is similar to a budget, but covers a longer time horizon of 10, 20, or 30 years ahead, whereas a budget is a short-term plan for the next few weeks or months.

The two work hand in hand, which is why a budget is often a component of a larger financial plan. These plans can also help you with your finances by prioritizing your goals, as it is often more effective to focus on one or two financial goals at a time.

Your financial plan should include events like buying a home, saving for retirement, and paying for your children's college education.

Set Realistic Goals

Take the time to set the financial goals you are working towards, such as buying a home or increasing your retirement savings. If you don't have specific things you're working on, you may find it difficult to motivate yourself to keep saving or investing every month.

When setting your goals, make sure they are realistic. For example, don't set a goal of paying $ 40,000 in debt in a single year when your salary is only $ 30,000.

Unrealistic goals that lead to failure can discourage you from making the right financial decisions in the future. Finally, track your goals over time to see how much you've accomplished.

For example, most modern brokerages offer tools on their websites that allow you to monitor the gains and losses of your investment portfolio over time. These tools can help you stay on track as you work toward a long-term goal.

Become an Investor

There are two main ways to earn money: by actively earning by working for it or by passively earning while you sleep, by saving, or by investing the money you have in stocks, bonds, mutual funds, real estate, or other financial instruments.

Since the long-term average annual return of the stock market is 10%, or 6% or 7% when adjusted for inflation, investing in the stock market is a great way for the average person to build wealth.

If the idea of ​​investing intimidates you, enroll in a course on investing basics, speak with a financial advisor, or speak with a trusted family member or friend who has experience in the field.

While investing is risky, investing consistently and spreading your money at the appropriate percentages across multiple asset classes (stocks and bonds, for example) can help you maximize your profits and limit your losses.

Protect Your Savings

If you're great at saving money each month, but investing quickly to cover a discrepancy in your budget or buying something on impulse, take steps to protect your savings from yourself.

Solutions include transferring your savings to a certificate of deposit (CD), from a conventional bank where the funds are easily accessible, to an online bank where the funds are less liquid, or starting an emergency fund in a bank separate from the one you use. habitually.

Increase Retirement Savings

Retirement will be expensive, so it's best to start saving for yourself when you start your first job, especially if a 401 (k) plan is offered. Even if you are working to get out of debt, contribute up to the amount offered by your employer; after all, it is free money.

If you're out of debt, work to increase your savings. How much you should save depends on how old you are when you start.

If you are 20 years old, you can survive on a contribution rate of 10% to 15% of your income, while someone who starts saving at 40 must contribute up to 35% of their salary towards retirement. The sooner they start saving Better for your wallet, both now and in retirement.

Find Additional Sources of Income

Financial problems are sometimes the result of insufficient income as opposed to spending problems. If you are on a budget, not spending money on things you don't need, and still having trouble making ends meet, you can look for a higher paying job or generate more than one source of income.

More income tends to provide more financial stability, especially if you are single or live in a single-income family. If you can't change jobs, look for income-earning opportunities alongside or in addition to your job.

Passive income from a rental property is another way to build wealth or find more money to get out of debt.

Improve Your Job Skills

While it may not seem directly related to your finances, job security is an important part of your financial picture because it determines the regularity of your salary. Make sure you have the skills you need to stay competitive in the workplace.

This could mean obtaining additional certifications or receiving training through your current employer. Or it could mean going back to college to earn a graduate degree that qualifies you for a more stable profession.

Get Insured

You can protect your finances if you have the right amount of insurance. Common types of insurance include auto insurance, renters or homeowners insurance, life insurance, and health insurance.

While you may be tempted to save on insurance, remember that it protects you from catastrophes that can trigger your finances.

Make the Most of Employee Benefits

In addition to your retirement and health insurance plans, your business may offer additional employee benefits such as dental insurance, vision insurance, and flexible spending accounts.

Not all of these benefits may be worth the extra money you pay for them, but some can help with your finances, freeing you from the need to pay essential expenses out of pocket.

Take the time to evaluate your options to make the most of your employee benefits.

Enjoy This Video Tutorial About Finances

Source: The Ramsey Show - Highlights

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