There’s a lot that goes into healthy finances. Here are some simple tips to keep your finances in order.
1. Budgeting
Planning out a budget is the basis of good financial practice. The basic use of a budget is to make sure you have enough money to cover your monthly expenditures, but you can take it a step farther to plan for the future and save money too. You can use a notebook, spreadsheet software or a budgeting app to track your monthly income and bills and estimate fluctuating expenses like groceries. A budget allows you to set goals for how much you want to save and plan out ways to achieve those goals. If, for example, you notice you’ve been spending a lot of money on trips to the movies, a budget can help you notice that pattern so you can make a decision on whether to cut back on movie tickets.
2. Paying off Debt
If you’re dealing with debt, keeping your finances in order and making payments every month can be daunting. Paying it off as soon as you’re able will free up your finances in the long-term. If possible, you can take any money you’re able to set aside each month and add that to your loan payments. Anything you can pay in addition to the minimum monthly payment will help you pay off a loan faster. If you don’t feel comfortable putting a large portion of your monthly income toward loan payments, focus on paying them off one at a time.
For example, auto loan rates tend to be lower than student loan rates. If you have an auto loan rate of 2.19% and a student loan rate of 5.8%, put any extra money toward the student loan to pay that off first and only pay the minimum monthly payment on the auto loan.
3. Refinancing and Consolidating
One of the first steps many people take when seeking to get your finances in order is to look into refinancing and consolidating debt. Refinancing a mortgage can have several advantages. You can lower your monthly payment, change the length of the loan or change an adjustable-rate mortgage to a fixed-rate one. Similarly, consolidating debt can lower your interest rate or monthly payment or give you a reprieve from paying interest for a set period of time where you can focus on paying down the principal balance. Personal loans and credit card debt are the best choices to consolidate.
4. Finding Deals
When you’re looking to save, sometimes you can look into the amount of money you’re paying for certain bills. In some situations, such as internet and cellular providers, car and home insurance and energy usage, you can shop around for better rates than what you’re currently paying. There are payment rate comparison websites available to check or you can do your own research. You can also cancel subscriptions you aren’t using, such as gym memberships or meal preparation kits.
5. Limiting Spending
Online shopping and the buildup of small purchases over time are some of the easiest ways shopping can get out of hand and mess with a budget. There are ways you can combat these issues to increase your savings.
Try incorporating no spending days into your month. Once or twice a week, don’t make any leisure purchases. These are things like coffee and take-out. The savings from reducing these types of purchases will save up over time. Shopping online can be completed with the swipe of a finger, and the lack of physically choosing and paying for items makes it easy to ignore price tags. Try to wait at least a day before you decide to make a purchase, and remove shopping apps from your phone to avoid temptation.
6. Building Savings
Most people know about saving for retirement or a big trip, but there are other situations to save for as well. If possible, you should try to put away a little money every month. The goal here is to have an emergency fund to keep you afloat financially for a few months if something happens. Some situations where emergency savings are useful include being involved in unexpected expenses like car accidents or loss of income due to job loss or pay cuts. You should put this money into an easily accessible account like a savings account so you can access the funds immediately if necessary.
Incorporate these tips into your life to shore up your financial wellbeing.
