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5 practical ways to manage your finances

Finance BY David Oct 10, 2018
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It is important to be able to manage your finances. Unfortunately, this vital skill doesn’t seem to be taught in most schools and many people make it into adulthood with no clue how to keep track of their own funds. If you’re struggling to keep your finances under control, you may want to look at these five practical methods of financial management.

Start with a Goal:

One of the most useful ways to get your finances under control is to start with financial goals. What success – and financial control – looks like varies from person to person. You may be less concerned with the size of your 401(k) than the number of places you visit while in your twenties, for example, and thus some traditional savings plans might not work for you. On the other hand, you might want to set up an aggressive plan that will allow you to retire in your forties. The way your finances should be handled absolutely needs to be based on your goals.

A good way to look at your financial goals is to set up short-term and long-term goals. Ask yourself where you want to be at the end of this year first, and then where you want to be at the end of five years. From there, you’ll look at larger increments of time – ten years, twenty years, and at your retirement. You should structure your goals so that you’re able to hit specific milestones at a pace that works for you. The goals of your far-future need not be as concrete as those you plan for today, but they should still exist.

Categorize Your Spending:

Your next step in financial management should be to figure out what you are spending your money on. A vital part of building a budget, categorization can give you a clearer idea of where your money goes and what you’ll need to do to manage your accounts. It’s amazing how much you can spend without realizing what you’re doing, and building up a solid set of spending categories can help you to get a perspective.

The best way to do this is to spend money as you usually would for a month. When you’re done, go back to your online banking statements and look at each transaction. Divide things up into basic categories – home expenses, entertainment expenses, and so on. Once you’ve gotten everything put together, try to figure out which expenses are negotiable. If there are things that you enjoy but don’t necessarily need, add them to your entertainment expenses. Once you’re done, you can start building a realistic budget from which you can work.

Build a Budget:

Budgeting is one of the key elements of managing your finances. While the other tips here will help you to stick to the budget you’ve set, it’s the budget itself that will give you the most control. If you are willing to not only put your expenses on paper but to stick to this plan, you’ll be able to manage your finances and build towards the sort of future that you wrote down in your list of financial goals. Budgeting really is as simple as knowing what should be coming in and out of your accounts during the month.

The tough part about working with a budget is that things tend to crop up that don’t necessarily have a place in your budget. As such, a good budget should have some space for discretionary spending. This doesn’t mean that you should have to spend the money, of course, but rather that you have funds available to help you through issues that might happen during the month. Your goal should be to keep your spending as close to the budget as possible so that you can put excess funds in a savings or investment account. Once you get used to your budget, sticking to it will become far easier.

Use High-Tech Tools:

If you have problems managing your money, you might want to offload some of the responsibility onto financial planning tools. There are hundreds of free apps and programs that will allow you to track your spending and save extra money, along with great apps that can alert you to when you’re going over budget or when you might be able to take advantage of specific deals.

If you’re looking to get serious, you may want to look at the best software for Financial Advisors on the market today. This software will give you the same tools that the professionals use, allowing you the ability to make higher-level decisions with an eye towards the future. If you’re willing to invest a little in your planning process, you’ll be able to get more out of your long-term savings plans.

Get Outside Help:

It’s important to remember that you don’t have to do all the work of financial management on your own. There are many professionals out there who are more than willing to give you advice and to set you up with products that can help you make the most out of your financial future. If you are unsure of how to start investing or how to keep track of your money, a quick visit to a financial adviser or to your local bank may be the best move you can make.

Do note that not there’s a difference between an adviser who can help you set up a savings plan and one who might want to sell you on a particular type of investment. Your goal should be to get information, not necessarily to buy a product. You are looking to gain control over your financial future, so make sure any help you get will point you in the right direction.

Managing your finances is a matter of having the right tools, the right mindset, and the willingness to plan ahead. With practice, you can manage your finances and take control of your financial future. No matter where you find yourself now, you can make a plan to get your finances in check.

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David Smith is a passionate writer and loves to write on technology, lifestyle, finance, business, and cover all the trending topics. He completed his education at Stanford University and obtained a Bachelor’s degree in Psychology. Now, he is a valuable contributor to Online Marketing Tools, Smart Business Daily, And Emblem Wealth, RSL Online.

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