How can you avoid money mismanagement? There are quite a few things you can do to help yourself, but some of the most important will be teaching yourself how to budget and keeping an eye on your spending habits.
If you’re having trouble with either or both of these, here’s how to solve the problem and live your life without financial stress eating away at you every day.
Reduce Expenses
If you spend time each month on figuring out ways to save money, the time investment will be worth it in the long run.
A simple way of saving is by downsizing your home, finding an apartment that’s close to work or even moving across the country. Other low cost changes can include switching cable providers, shopping at grocery stores that provide lower prices, clipping coupons and being creative with affordable cooking or produce substitutes. It’s also a good idea to compare your utility bills against your usage patterns.
Set a Budget
Whether you are about to go on vacation, or are thinking of moving into your first home, it is vital that you set up a budget for yourself so that you can start saving for the future.
Rather than rushing out with no idea how much things cost and where your money will be going, it is better to sit down beforehand with pen and paper (or excel) and plan out what needs need to be paid for in advance.
Develop Financial Goals
First, create your monthly budget. You need to know what you spend your money on in order for you to have a clear view of how much is left over at the end of the month. If there is any emergency that arises such as medical bills or rent being late, then there will be cash set aside for it already. Secondly, start developing emergency funds.
Save Money Through Coupons and Deals
One of the most common tips for saving money on food is using coupons, deals, or restaurant gift cards. But there are some unique ways you can save without clipping coupons that might not be as obvious. For example, downloading the Ibotta app onto your smartphone will give you cash back anytime you spend at Walmart. So if you’re at Walmart this week to get groceries but forget your coupons, just scan your receipt in with the Ibotta app and receive cash back on all the items in your cart!
Invest in an Emergency Fund
Start by saving at least $500 as an emergency fund in a high yield, liquid account (such as an interest bearing checking or savings account). This is not only important for unexpected emergencies, but it can also cover the cost of car repairs, furniture replacement and various other budget busters.
Ditch Cable TV
Cable television packages are costing Americans nearly $100 billion per year. But with affordable streaming services like Netflix, YouTube TV, and Hulu with Live TV, you no longer have to spend that kind of cash for your entertainment needs. Consider it an investment for your sanity, you’ll save time, money, and many unnecessary arguments over which channel is this again?
Grow income through side gigs or starting your own business
Believe it or not, there are many ways to make some side cash without quitting your day job. By doing this, you can create an emergency fund as well as give yourself the option of starting your own business.
Avoid Homeowner’s Insurance Adjustments
When buying homeowner’s insurance, most insurance companies will allow you the opportunity to declare major items in your home that have been destroyed or stolen so that those funds can be used instead of coming out of your pocket.
With this in mind, it’s important not to cancel any existing insurance policies for these major items until you are fully insured by the new company.
Cancelling your current policy could jeopardize your ability to get them covered, as homeowners’ insurers will want all pieces of documentation proving ownership before they approve a claim.
Redirect funds from savings to retirement accounts when possible
Maintaining a high savings rate can be hard for people who are still paying off debt.
However, if you can find the extra cash in your budget for retirement savings, do it. Not only will you sleep better at night knowing that your future is secured, but you may also qualify for tax benefits! For example, saving in an IRA could entitle you to an additional tax deduction on your income taxes this year.
