“Financial Strategies”: two words that may make you feel uncomfortable. Money can sometimes be a touchy subject. Let’s take this one step at a time, by starting with your memories. Did you have a piggy bank growing up? Do you remember picking up “lucky” pennies? Maybe, you did chores around the house to earn an allowance. Or, perhaps there was a toy that you just had to have. However, in order to get it, you had to pay for it yourself. All of these scenarios are examples of how our relationship with money begins to form at a very young age. Sometimes, without us even realizing it.
As we get older, this relationship can get a bit more complicated. From bills, mortgages, taxes, loans, and debts- not only is the topic of money not as much fun as it used to be, but it can also be a major source of stress. The following article will offer a few financial strategies to follow in order to make your life easier.
Track Your Spending
The first thing you should do is write down exactly where your money goes throughout the month. This may seem like an unnecessary step since you can probably list where it goes right off the top of your head. However, morning coffee runs here, and a few take-out dinners there, add up! When you take the time to write down where every single penny goes, the list may be longer than you realize.
Does writing it all down seem like too much work? We agree. Thankfully, most banks offer a free tracker which uses the information synched with your bank accounts. Then, they use your spending data to create piecharts. These show where your funds are allocated (i.e food, clothing, utilities).
If your bank’s system isn’t for you, there are several other options. They even have apps made specifically to track your spending (click here). All of these apps should be free to use but always be careful when signing up with one; you wouldn’t want to pay for any surprise fees.
Organize Debts
Now that you’ve looked at your current spending, it’s time for the “not so fun” part: debts.
Debt can creep up on anyone. Whether you were careless with your money, or you somehow got in over your head, you must get debt taken care of. This is not always easy, but there are ways to make it easier.
Just like you did when you tracked what you spent, it’s time to write down everything you owe. Balances, interest rates, required payment dates, oldest to newest debt, everything. Sometimes, you’ll be able to pay each one off slowly and surely, but many times the interest rates alone are hard to keep up with. This is when you should consider consolidating all that you owe.
This means, instead of several amounts to pay, all debts are put into one sum. This amount will then need to be paid off. But now, it may have a lower interest rate, lower monthly payment, or both. If this sounds like the proper solution for you, or you want more information, click here.
Automatic Savings
After you’ve gone through all of your bills, and organized your payment plan towards debts; you have the big picture. The money that is coming in versus what’s going out. You are now able to figure out what to do with any amount that is leftover. Ideally, this money should be transferred into a high-interest savings account. This is one of our favorite financial strategies. If you set up automatic savings, you’ll one day be surprised at the large balance of your savings account. More information about high-interest accounts can be found here.
For example, you may use this account as an emergency fund. You can never know when an incident may occur. Imagine this incident prevents you from going to work. Or, even worse, it leads to hefty medical bills. At least you will know there is some money stored away. Plus, if you don’t have any incidents, these funds can eventually go toward your retirement savings or a vacation!
These are just a few financial strategies you can try; there are several other creative ways to make the best of your finances. Do you have other ideas we should try? Let us know!