Ten Ways To Better Manage Your Finances

Whether you’re trying to save for retirement or have an easier time with your monthly bills, managing your finances is exceedingly important in today’s world. The major problem is that less than 20 percent of employees are ready for retirement or random financial needs like medical bills or other emergencies. If you want to better manage your finances, then follow these 10 tips.

Adjust Taxes
If you are an employee, then pay attention to how much taxes are taken from your weekly check. People who get larger tax refunds at the end of the years are at a disadvantage. Not only is that money tied up with government until the end of the year, but you can’t use or invest it until you get the refund check. Try to reduce your taxes to have some more money each week.

If you are self-employed, then deduct everything you can during the tax season. Self-employed people have to pay higher taxes, but they can pay less than employed workers if they make the right deductions.

Watch Spending
Where is your money really going? You know it’s going towards bills and necessary expenses, but most people find that they are spending hundreds or thousands of dollars on unnecessary expenses. Experts suggest that you check your last three credit card and bank statements to see what you are spending your money on. You can then limit your spending to have more for your retirement fund or other needs.

Save for Holidays
Most people don’t pay for holidays and vacations with their available money. They will turn to their credit cards to finance these spending sprees. It’s a much better idea to save for the holidays and vacations so that you don’t have to pay the credit card’s interest rate. Not only that, but you won’t worry about paying off the large debt.

You should divide your regular holiday and vacation spending by 12 and save that much every month. This will also keep you from overspending because the expense will seem more tangible.

Necessary Living Expenses
While it is getting better, the unemployment rate is still fairly high. Experts have said for years that everyone should have at least three to six months worth of money saved in the bank so that anyone affected by a financial crisis can get through it without panicking.

You should still save this much money, but experts are now saying that 10 to 12 months worth of money is better. Not only does this keep you from using credit cards or getting loans, but you’ll be able to make sound financial decisions if something happens.

Make Larger Payments
Nearly everyone has debt. It can come from credit cards, loans or mortgages. All of these debts have interest rates that will make you pay substantially more than the original debt. While you will eventually pay the debt in full if you make the minimum payment, you will pay much less if you use your extra money to make larger payments.

If you have a few debts, then it’s best to use the money on the debt with the highest interest rate. If you have many debts, then it’s in your best interest to pay the lowest debt so that you can quickly get rid of it.

Automated Deductions
Many people save any money they have at the end of the month. This seems like a good idea because it allows you to pay all of your bills without worrying about running out of money. The bad thing is that you will be more likely to spend that extra money on small things throughout the month.

It will be much easier to save money if you have it automatically deducted from your check. For example, place the money in a bank account or retirement fund. You’ll learn to live with slightly less each week, and you won’t feel tempted to spend the extra money on unnecessary expenses.

Make a Plan
Saving money is difficult when you don’t know how much you need for your long-term goals. First of all, what are your goals? What are you saving money for? You should then find out how much money you really need to save. For example, if you want to retire in 20 years, then how much money do you have to save every week?

Making a plan allows you to create a realistic budget, and it ensures that you have realistic expectations. Another benefit is that you’ll feel like you’re achieving something. Saving money for no reason won’t motivate you, but saving money so that you can live your golden years without worrying about finances should be motivational.

Invest and Grow
While it’s true that most people are not good at investing, you should invest your money in some low-risk ventures to make the most of it. Not only does this increase the value of your savings, but it will be easier to manage your finances because you’ll be building wealth.

Failing to invest your money will make things much harder. For example, you might have to save thousands of extra dollars to reach your retirement goal. You can place the money in a Roth IRA fund, buy bonds and invest in a mutual fund. There are many low-risk investments that can make your money grow.

Understand Net Worth
Nothing helps people manage their finances more than understanding their true financial situation. You could make $120,000 a year or more, but still be in debt. Net worth is basically what you own versus what you owe. To figure out your net worth, look at all of your assets and annual income. You should then add up your bills and liabilities. The difference between these figures is your net worth.

Check your net worth every year to see how your finances are doing. Not only does this show you where your money is going, but it will help you understand what you are really worth.

Personal Finances


Consult Experts
Still having a hard time managing your finances? There’s no shame in visiting an accountant or financial adviser. He or she can look at your financial situation and then create a suitable budget to help you reach your goals. It might cost some money, but you’ll have a professional budget that really accounts for your needs and limitations.