A key focus of my blog is Financial Literacy/Money. Money is one of those things that will literally disappear without a trace if you don’t take an active role in its management and tell it what to do. Immersing yourself in its management is the key to being successful with it. The following contributed post is entitled, The Benefits Of Taking An Active Role In Money Management.
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Did you know that a quarter of Americans claim to be worried about money constantly? With an uncertain future ahead, and the economy sharing headlines with health news on a daily basis, it has never been more important to take an active role in money management. Here are some of the key reasons to keep a firm grip on your finances and some tips to help you cope if money is a source of stress.
Controlling spending, reducing the risk of getting into debt and saving with a budget
One of the most beneficial steps you can take to manage your money effectively and tip the balance in your favour is living with a budget. If you don’t already budget every month, you may well be surprised at what a difference it can make. There are now several ways you can create a budget and track spending, including traditional pen and paper, spreadsheets and apps. The primary aim is to enable you to gain an accurate insight into the comings and goings of your accounts, so that you know how much you’re earning and what proportion of your income you’re spending.
With a budget, you can control spending, lower the risk of getting into debt and save more money. Use your budget to set a spending limit for each week or month and analyze your outgoings carefully. You might find that you stumble across payments you thought had ended months ago, or you might suddenly remember that you’ve still got subscriptions or memberships you don’t even use anymore, for example. Your budget might flag up overspending on groceries, or you might be shocked at how much your insurance policies have gone up. Use the data, update your budget as you go to ensure that it’s always precise and look for areas to make cuts.
Keeping a close eye on your financial activity
It’s simpler than ever before to track spending with online banking and money apps, but it’s also incredibly easy to forget about payments you’ve made due to the fact that we rarely use cash now. With contactless technology, smartphones and direct debits, money can be flying out of your account without you so much as signing your name or entering a pin code. Make sure you know what’s going on in your accounts every day. Download apps to check on the go, and don’t ignore statements or texts with warnings or balance updates. Keeping an eye on your accounts can help you regulate spending and ensure you notice any potentially suspicious or fraudulent activity as soon as possible.
Seeking expert advice for financial issues
It is not uncommon for people to get into debt and find it difficult to get out. If you’re struggling to pay your bills, your credit card balance is increasing day by day, and you’re falling behind with your rent or mortgage, the best thing to do is seek expert advice as early as possible. There are multiple debt management solutions you could consider, and a financial adviser will help you select a route that caters to your needs. Examples include credit counseling, debt consolidation, and in cases where you can’t cover your debts, a consumer proposal. It can be daunting to reach out, but debts can spiral very quickly, especially if you have a high-interest credit card, or you’re borrowing on a regular basis. If you’re in a tricky situation, there are ways to reduce debts, to prevent creditors from pursuing you and to protect your income.
Working towards a stable future
Most of us would like to have a financial cushion, but it can be very challenging to save when you’ve got a household to run. If you can use your budget to make savings and analyze your spending habits to create a wider gap between your income and your outgoings, try and put a little aside each month. It’s also critical to look into employee benefits or separate pension programs if you are self-employed. If you have an emergency fund and a retirement pot, this will stand you in good stead in the future, particularly if your circumstances change. Look for savings accounts with a high interest rate or consider putting your money into an asset that will appreciate. If you have a healthy balance, and you’re keen to invest, you could look into buying a rental property or stocks and shares, for example.
Picture courtesy of https://www.pexels.com/photo/money-pink-coins-pig-9660/
Budgeting, analyzing bank statements and tracking spending might not be everyone’s idea of fun, but it’s so crucial to have a handle on your finances. Taking an active role can help to prevent overspending, lower the risk of getting into debt and facilitate saving.