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5 Ways to Get in Control of Your Finances

5 Ways to Get in Control of Your Finances

It’s easy to lose track of your finances, especially if you’re a busy person or if you’re not quite sure what you’re doing. However, personal finance is a major factor is securing a comfortable life for yourself. It’s important that you understand where your money is going and how it’s being saved. With the proper know-how and techniques, you can save the most efficiently.

Money shouldn’t be a stressor for you. In fact, it can be quite interesting and a little fun to keep track of your income and expenses! Once you see how your money comes in and out, you’ll feel more reassured when spending your money. Here are five ways to get in control of your finances:

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Get Educated on Personal Finance

Personal finance is something that we should all know as adults, but sadly, we’re not always taught it in schools. Or if we are, we easily forget the minor deals that could save us a lot of money in the long run. If you feel that you’re unclear on managing money, whether it’s the basics or a specific aspect, you should brush up on your personal finance knowledge. Now, this doesn’t mean you have to go back to school. The good news is that these days, knowledge is free and readily available online. And with video tutorials, eBooks, and podcasts, knowledge is in the medium of your choice! Find some highly-rated tutorials online and get started.

Use Budgeting Software

Once you are more familiar with the ideas behind personal finance, you should put that knowledge in to practice. Nowadays, there are tons of different programs and apps to help you keep track of what you’re saving and spending. They all have different features, so do a little research before you dive in. Or, try using two alongside each other to see which you prefer. Budgeting is important because it keeps your goals in black-and-white, giving you less of a chance to slip back into bad habits. Even if you aren’t good with computers, you can go the old-fashioned route: a pencil and paper!

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Pay Down Your Debt

It seems everyone has an opinion on personal finance, and even the professionals are all going to have different ideas about how best to save your money. But most will agree that your first priority when getting in control of your finances should be to pay down any outstanding debt you might have. This is because debt accumulates interest, which is compounded, meaning that the longer you wait to pay off your debt, the faster it grows, and the harder it will be to pay off.

Choose a Bank and Credit Card That Work Best for You

While there aren’t many huge differences between banks, each bank will have slightly different features than the other. Perhaps one bank has more ATMs around the city you live in, or perhaps another has a good online banking system and app for your phone. Keep in mind, also, that different banks may offer different interest rates for your bank accounts. Choosing a credit card will offer the same kinds of decisions for you. Some credit cards offer cash back or frequent flyer miles in return for you using their card. Read up on on the different banks and credit cards to find out what best fits your interests.

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Be Frugal

Frugal, despite common belief, does not mean “poor.” It means spending your money as wisely as possible. Experts will tell you that you should always live below your means. How you choose to be frugal is up to you. Perhaps that means living in a home that has a cheaper rent or mortgage. Or perhaps you should aim to spend less on entertainment each month. If you have a budget and are keeping track of how you spend your money, you should be able to figure out where you can best cut your spending. Additionally, online coupons and vouchers can help you save on your monthly expenses.

Personal finance isn’t always easy, and there will be times when something doesn’t make sense. Don’t give up! The result will make all the trouble worth it. And if you follow these tips, you’ll have a solid foundation for getting back on your financial feet.

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Featured photo credit: 20 Best Personal Finance Books You Should Read Now via lifehack.org

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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