Managing money isn’t rocket science. It’s just a matter of learning how to do it right and being disciplined with your spending habits. Everything can be learned, and positive money management is no different.
To get you started on the right path, we’ll cover 6 no-fuss, effective money management tricks in this post that’ll have you on your way to a stress-free future of financial freedom.
#1 – If You Have Debt, Consider Consolidating It
The main advantages of debt consolidation are a reduction in the monthly payment amount and potentially less interest owing as well. Let us assume you have 3 credit cards with an average interest rate of 15%. You could get a personal loan at say 12% interest, payout the 3 credits cards, reduce your minimum monthly repayments and interest and only have to remember to pay one bill instead of three.
Another option is transferring the balance of one card over to another card if your bank offers you a reduced rate of interest for balance transfers or even an interest-free period. Always make sure to read the fine print on those balance transfer deals though, to make sure it is worth your while.
#2 – Create a Budget Following the 50/30/20 Rule
This is a simplified household budget that follows the principle of separating your expenditure into 3 categories with varying percentages for each. While your particular budget may differ in percentages, we’ll use the 50/30/20 rule as an example for this post.
In simple terms, you work out your total monthly income after tax and allocate 50% of it to your needs, 30% for wants, and the final 20% is for savings.
Depending on the total of your needs, your budget might work out to be a 60/20/20 budget, or 65/25/10. Whatever works for you & your particular situation.
A more detailed budget would involve listing every item of expenditure, especially things you have to pay like rent/mortgage, electricity, food and so on.
#3 – Write Out 2 Financial Plans
These are not about budgeting so much, but are more about planning out your finances, setting financial goals and creating a guideline to reach those goals.
The first financial plan can be for the short term, which might predominantly be a savings plan. Your savings plan could be something you continue indefinitely, or you might decide to use those savings down the track to increase your income through investments or a business venture.
Your second financial plan will be a long-term one. Where do you wish to be financially in the next 10 years? That’s the kind of question you want to ask yourself and work out an answer to for a long-term plan.
#4 – If You Use Credit Or Finance, Use It Wisely
Racking up debts on credit cards is a sure way to destroy any form of effective money management, but if you use credit wisely, it can be a positive. For example, many credit cards offer interest-free periods if you pay back the balance in full by a certain date. These cards will also offer rewards points and Frequent Flyer points that you can avail of. Having a credit card with a small credit limit that you save only for emergencies only can also prove very handy.
Likewise, if you come up with a way to earn more money but need a few thousand dollars to kick start your idea, you can go online and visit websites like Sunshine Loans to apply for a fast cash loan. These are short-term loans with very competitive rates. They are perfect for immediate cash flow to boost your finances no matter what your goals are.
#5 – Live On Beer Until You Can Afford Champagne
In other words, to quote a cliche, don’t live a champagne lifestyle on a beer budget. Your finances will rapidly spiral out of control if you do. It’s all about being wise and patient, especially. If you create a plan and work hard towards your goals, soon you’ll be able to graduate from the beer budget to the more illustrious champagne lifestyle.
#6 – Maintain a Healthy Credit Score
Your credit score is a rating based on how well you stay on top of bill payments and paying off credit and loans. The healthier your score, there’s a better chance you’ve of getting a home loan or business finance when you need it.
Along with saving, budgeting, wise spending and planning, maintaining a good credit score is also wise.
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