You work hard for your money. You deserve to spend it on what you want. But not knowing where your money is going can also be stressful and lead to financial issues. Understanding your finances will help put your worries at ease and get you back on track with your goals.
Money management isn’t easy, but it doesn’t have to be complicated. Here are five ways to help you track and manage your finances so that you don’t fall into debt or miss out on life-changing opportunities.
Use A Budget and Expense Tracking App
Making an effort to budget your money is the best way to start managing it, but it’s not always easy. The good news? There are tons of apps out there that can help simplify the process. Some even automatically categorize your spending for you, which means that all you have to do is input how much money you spent during that particular time period. You may also want to use a cash-based expense tracking app like Mint, Level Money, or LevelUp (if you’re using a debit card). This will help you build up a history of your previous expenses so that whenever something important comes up (like buying a house), you know what your budget is capable of handling.
If you want to do this manually, you can check out CalCurator.org to help you find the correct calculations to assist with your budgeting efforts.
Identify Room For Improvement
The first step is to identify your financial goals and what you need to do to reach those goals. Are you trying to save for a vacation? Maybe you’re paying off debt or saving for retirement. Whatever your goal, it’s important that you know what you’re working towards. Next, write down your income and expenses as they come up. If you’re not sure what any of these words mean, we’ve got definitions for them below.
One of the most critical steps to managing your finances is categorizing your spending. You may think that you know where your money goes, but you probably don’t. For example, there are different types of spending categories:
- Fixed costs (e.g., rent or mortgage, insurance)
- Variable costs (e.g., groceries, gas)
- Investment costs (e.g., stocks, retirement plan)
- Entertainment costs (e.g., movies, restaurants)
- Personal care costs (e.g., haircuts, salon services)
If you aren’t sure how much money can go into each category at a particular time, take the time to figure it out and create an accurate budget for yourself. This will help you allocate your money appropriately and make better spending decisions.
Always Check Statements
It’s easy to forget about the little expenses that add up over time, but continuously checking your statements will help you stay on top of them. This way, you can catch any mistakes or mischarged fees early. Plus, it’ll help you spot any possible money leaks so that you can correct them before they have a significant impact on your budget.
Set Financial Goals
Setting financial goals is one way to track and manage your finances. Goals can take many forms, depending on what you want for your life. One goal might be to save up money so that you can buy a house, while another goal might be to pay off your debt by the end of the year. Having goals will help you prioritize how much money to set aside for each purpose.