It’s often said that money is something that will control you if you don’t learn to control it first. Lately, that’s something many people are finding out firsthand.
According to a Mind Over Money survey from Capital One and The Decision Lab, 77 percent of Americans say they are feeling anxious about their financial situation. This is not surprising given the rising costs of everything from groceries to getting a new mortgage. Plus, with the economy constantly flirting with the possibility of a recession, that doesn’t help matters either.
While personal finance can be complicated, it doesn’t have to rule run your life. The following are ten ways you can get back in the driver’s seat and start making your money work for you.
1) Get Realistic About Your Budget
Do you know how much you spend in a given month? If not, then it’s time to start managing your money using a budget.
Think of your budget as a plan for how you’ll spend your money. Obviously, you’ve got limited funds, so you can’t buy everything. But you do get a say over what you will spend your income on.
A budget is just putting that plan on paper. Just the mere act of going through your expenses and deciding which ones are a priority and which ones aren’t will help naturally help you feel more in control.
If you’ve tried keeping track of your finances in the past but got too busy to keep it up, then a better solution may be to use an app like Buxfer. Buxfer connects behind the scenes to each of your banks and credit cards capturing every transaction you make. That way the data can be condensed into a single report so that you’ll know in real time if you’re on track.
2) Break Bad Habits
Are you a sucker for making impulse purchases? We all tend to do this from time to time, but it’s not a habit you’ll want to keep. Usually, it’s these spontaneous purchases that throw that make you go over your budget.
A helpful way to curb impulse purchases is to eliminate the temptation. Don’t go shopping out of boredom – either in person or online. Find something else to do like being active or learning a new skill.
Additionally, unsubscribe from stores and services that bombard your email or social media with advertisements. Just because something is on sale doesn’t necessarily mean you need to buy it. The more out of sight you can make these ads, the more out of mind they’ll be.
3) Set Goals for Unwanted Debt
Do you have student loans? A revolving credit card balance? An auto loan?
Debts such as these can really strain your cash flow and get in the way of your future financial goals. For that reason, you need to have a plan for how you’ll eliminate them. Paying off just the minimum is not going to cut it. To make progress, you’ll need laser focus.
A helpful strategy that’s been used by many is the debt snowball method. This is where you prioritize your debts from smallest to largest balance and focus on putting any extra resources you can towards them. Doing so helps to get rid of the ones that will be the easiest to knock off first. In turn, those early victories will make you feel more motivated to keep working away at them. You can find out more about the debt snowball method here.
4) Automate Your Cash Flow
How many times have you told yourself that you’re going to move more money into your emergency fund or brokerage account? However, when the time comes, you forget or there’s some other reason why you can’t?
Don’t worry. Humans are bad at following through with financial transactions like these because they feel like a loss – even though it’s just moving money from one account to another.
A better method would be to set up your accounts to pull the money automatically on a weekly or monthly basis. That way the transaction will happen without requiring any future involvement from you.
5) Build Up a Savings Buffer
Oftentimes the thing that makes us nervous is seeing our bank account go below a certain number and get too close to zero. If you had some cushioning in your account, this would probably make you feel a lot better about not just paying your bills but also handling the unexpected.
A good number to shoot for is one to two months’ expenses. Consider it part of your emergency fund.
6) Make Friends with Credit
Despite any issues you’ve had with credit in the past, you need to have a good credit score. Your credit score is how you’ll be judged by lenders, insurance companies, mobile phone providers, etc.
For this reason, check your credit score on a monthly basis. This can usually be done for free through most major credit cards. Remember also to practice good credit habits such as not using more than 30 percent of your total available credit and setting your bills up to be paid automatically.
7) Leverage the Power of Investing
Working and saving your money can only get you so far. In order to take your finances to the next level and grow your net worth where you want it to be, you’re going to need to become comfortable investing.
Investing harnesses the power of compound interest – essentially earning money on top of money. Whether it’s with stocks or even ultras-safe CDs at your local bank, investing takes your principal and gives it the power to be more than what you have today.
An easy place to start is with a retirement plan. If you work someplace that offers a 401k, take advantage of it. If not, you can always open a Roth IRA at any brokerage that offers them.
8) Never Stop Learning
The more you understand about the way money works, the less scary it seems. This can be true whether it’s with paying down debt, taxes, or investing. Challenge yourself to learn at least one new tip each day. With all of the financial media, podcasts, and videos out there, you’ll never run out of free, valuable topics to learn.
9) Ask for Help If You Need It
Not everyone learns or moves at the same pace, and that’s perfectly okay. If there’s something about personal finance that’s just not clicking or causing you to struggle, then ask for help. Just as doctors are there to prescribe medicine when you’re not feeling well, there are plenty of financial resources out there if you just reach out.
10) Enjoy the Fruits of Your Labor
Finally, don’t forget to actually enjoy your money. Sometimes when our finances seem overwhelming, the natural knee-jerk reaction is to cut out everything that’s fun in our lives so we can focus only on paying our bills. But that’s what makes you feel like you’re in a prison.
Instead, try the tips we’ve mentioned above. At the same time, budget some fun into the equation. Not only will this be much more enjoyable but it will also be more motivating. When it comes to being in financial control, a little of each is what you need.
Featured image credit: Pexels
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