The way you manage your money plays a crucial role in determining your future financial status, which could lead to being comfortably well-off or barely getting by each month. Balancing your monthly budget against the balance in your checking and savings accounts to decide whether you can afford a purchase. Although you may have plenty of money, it’s still up to you to buy the things you want. Personal finances can be hard to navigate without some sort of self-control. This often leads to people overspending and living paycheck-to-paycheck. Proper money management will help you get a better handle on your income and expenses so you can make informed decisions that positively affect your financial status. It’s because of this that it’s so important to learn how to manage your money like a pro, so you can reach your financial goals easily and in a calm state of mind. Here are five tips to get you started!
1) Track your spending
If you are not good with money, it’s probably because you don’t track how much money you spend. Checking in on your money each month can show you how you’re using your money. One way to do this is to separate receipts into separate envelopes and see how much you spent at different shops during a set period of time—30 days, three months, whatever works for you. You might be surprised at how much spending goes under your radar.
2) Set a budget
Research indicates that people with higher incomes tend to waste more money. When you’re not having to save every last penny, it’s easy to justify wasting more on the extra stuff— in fact, some people are actually spending up to 40% of their disposable income on items they don’t really need. To really learn to manage your money, create and follow a budget. At first it may be difficult, but soon you’ll find that you’re saving more money than ever before. If you update your budget as you pay your bills and spend money on other monthly expenses, you’ll know where you stand at all times. Any time during the month, have an idea of how much money you can spend, accounting for any outstanding expenditures.
3) Know where you stand financially
Before you can begin managing your money, you need to know where it is and how much of it there is. Sit down and look at all of your bank statements, credit card bills, checking account statements, and retirement accounts. Once you’ve taken a good look at everything in black-and-white print, it’s time to take some action. The first step should be paying off any outstanding debts or loans. This means not only credit cards but also student loans, car loans, mortgages – anything that will require money on an ongoing basis. Next up: saving for retirement. If you’re fortunate enough to have an employer match their 401(k) plan or offer another form of company-sponsored savings plan such as profit sharing or stock options, take advantage!
4) Invest in your future
If you’re just getting started in your career, it might be tempting to blow your paychecks on fun stuff. But remember: You can’t take those memories with you when you’re gone, so think about putting some of that money toward your future. Set up automatic monthly deposits into an IRA or 401(k) and focus on building a foundation for long-term financial security. Not only will it help save you from yourself later in life (and keep you out of debt), but it also gives you access to valuable retirement benefits that are much harder to obtain once you’ve left your employer—no matter how old or young you are.
You might already have a 401(k), which many employers offer and some companies will match. You should make the 401(k) the first choice in investing to gain any available match.
If you’re already contributing to a 401(k) or don’t have one, you can open an individual retirement account. In a traditional IRA, your contributions are tax-deductible but you have to pay taxes on the money when you withdraw it later in life. A Roth IRA is like a traditional IRA, but the rules are different: Contributions are made after-tax, but money grows tax-free and there are no taxes in retirement. You may also open a retirement account if you are self-employed.
5) The best expense tracker apps of 2022
Many of these expense tracker apps do more than just store receipts. You can keep track of your credit, send invoices, create a budget, reconcile accounts, track the performance of investments, and create mileage records. For the most part, these apps are free or very low-cost.
Each app should have the capability to sync your account transactions, be reasonably priced, and have tools to track your personal and business finances for the best outcome.
The Best Expense Tracker Apps for 2022
Best Overall: Mint
Best for Small Businesses: QuickBooks Accounting
Best for Investors: Personal Capital
Best for Receipt Saving: Expensify
Best for Reimbursement and Mileage: Everlance
Best Free Option: NerdWallet