Many people find it challenging to manage their finances, and they can sometimes end up in debt. Others mistakenly believe only rich people must develop a financial management plan. However, with some basic money management principles and expert help, money challenges can become more manageable. Here are some guidelines from financial experts which may be the advice you’ll need:
Monthly Budgets Should Be Realistic
To wisely handle your money, you need to write down the income you receive in a month and then record all your monthly expenses, like rent, utilities, insurance, phone, internet, and TV. Some amounts may vary each month: like groceries, gasoline, or unexpected expenses like a flat tire. When you compare your income with your expected expenses, you will know how much money you can spend on vacations, gifts, and other items.
Savings Are Essential for Financial Planning
A savings account may help you have money for a large purchase like a wedding. According to Investopedia, you should consider your monthly savings as a bill; by designating a planned amount in your monthly budget for savings and placing that money in your savings account as soon as you get paid. According to Heitmeyer Consulting, almost 80% of American banking customers in 2022 preferred mobile apps or online banking. Having your banking transactions on such an app may help you track your money.
Retirement May Cost More Than You Think
The population of the United States currently has a large percentage of elderly people – and people are living longer than before. Take advantage of retirement plans offered by your employer (such as IRAs). Saving for your retirement should be a separate and additional amount from your regular monthly savings. The amount of money you will get from Social Security when you retire will be a fraction of what you’ve been accustomed to from your salary, and your retirement savings will be essential for you to live comfortably.
Investments Aren’t Just for the Wealthy
Even if your budget is tight, placing small amounts in investment accounts can help your income to make more money for you. Many employers offer 401K matching, which means your employer matches the money you save in a 401K account. If you invest in the stock market, diversify your portfolio. Placing all your money in one investment puts you at risk of losing all your savings.
Potential Future Expenses Should Be Considered
There are likely to be significant future expenses you should anticipate, which could prompt you to make changes in your savings – or the types or amounts of insurance you carry. For example, you may estimate that you will need to buy another car in ten years or move from home to an apartment. According to the Guardian, over 70 million Americans live without dental insurance. If you are one of those Americans, saving money to cover future dental expenses will be essential.
Financial Planners Can Be Your Best Ally
Whether you’re just beginning to take charge of your finances now or you’ve been successfully using a budget for years, a financial planner can be the objective advocate you need to navigate all finance-related matters. According to Gitnux, millennials who work with financial planners are 3 times more likely to report positively about money matters. These professionals can look at your overall financial picture, see challenges you may not notice, and then help you fix them.
It never feels good to live with tight finances, and it feels even worse to be crushed by debt. Using some of the above advice and listening to a financial planner will help steer you in the right direction you need to go. No matter how long you wait to begin, it’s never too late to improve your financial situation. Sit down with someone you trust to help you manage your money in a way that will allow you to comfortably enjoy your life.