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5 Tips on How to Manage Your Finances More Efficiently

5 Tips on How to Manage Your Finances More Efficiently

In my school, I had to know how DNA is replicated and why the War of the Roses was called that – but finances, nope! Mathematics and arithmetics are fun (not really), but they did not provide me with what I really need today – and that is how to have enough money to survive from one paycheck to the next.

In this article, I presume that you have a job, or at least some sort of income, and I have a good guess that you are not good at managing your finances; well, guess what? Nobody is. Unless you are Donald Trump and you are born rich.

The rest of us, we have to make do with what we’ve got, and it usually isn’t enough. Mortgages, credits, student debt and other nasty words such as these can creep up on you when you least expect it and ruin your chances of visiting Italy this year, or the next for that matter.

Well, unless you’ve developed a great singing talent while reading my introductory paragraph, and you’re planning on making big bucks while singing country songs, prepare to read our 5 tips for making yourself more financially stable.

1. Know Your Expenses

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    This is the first, and probably the most important item here. You need to know exactly how much you and your family are bringing in, and how much is going out. This might seem like a true hassle and a lot of paperwork, but you need to know the current state of affairs.

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    It might seem obvious, but you should spend less than you earn, as that would be the perfect case scenario; then, you’re done and you can stop reading right now. If you find yourself on the negative side, no matter how impossible that might sound, a lot of people actually live like that, yes, it is somewhat stressful, but it is possible.

    Once you get to know where your money is going, and what kind of life it is living, it is also important to know terms like investing, taxes, insurance and retirement plans. Once again, nobody mentioned those things while you were in college, and somehow, they are trying to actively ruin your life. Remember: Google is your friend – if you don’t know something, google it immediately; only knowledge can help you with your financial troubles. Or rich uncles – they are also a nice solution.

    When creating a list of expenses, try to find something that looks like something you can live without. Maybe you don’t really need that gym membership, since the last time you visited, Christina Aguilera was still popular. On the other hand, maybe you can give a few dollars more on a bank account that will make all ATM withdrawals free – you never know where some hidden expenses might be unless you play this game of hide and seek.

    The most important thing here – be honest with yourself; the only person you could be lying to here is yourself (and people are quite good at that; I know I am – I’m looking at you, diet). The more honest and reasonable you are, the more rational decisions you will be able to make. Ask a friend to help you, your mother or father, unless they plan on nagging about how fiscally irresponsible you are.

    2. Learn What to Rent, and What to Buy

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      Many people do not agree about whether it is better to buy stuff or simply rent it – in the long run, that is. For example, if you are planning on renting a home, where you plan on living with your family, it is better to think about buying it permanently, via bank credit. Renting may sound like a good solution for now, but after 10 years (and trust me, time passes by quickly) you might regret only renting, when you could have paid off 70% of your home by that time.

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      On the other hand, renting a DVD might be a much better solution than buying it. I know, nobody buys DVDs anymore, but you get my point. Do not go in blindly and buy everything you need; there is probably a service that can provide you with the same result, for less money. If you’re having money issues, it’s a better idea to join the local library than buy every book you want.

      If you plan on using something for a long time, then it is better to buy – it is called cost analysis, and it sounds difficult, because it is. It involves not only money, but whether you actually need that item, and how much money that item will cost you in the future. Even though I mentioned that you should take a bank loan and buy a home, it is not a piece of advice I give out lightly.

      You should be 110% sure that you can survive such an adventure, and then decide. Think about your future mortgage and when you should start paying it off. Maintain a high credit score, which means that you cannot use your credit card like Monopoly money; only buy what you can actually afford.

      3. Play the Responsible Game – Invest

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        Now, this is something everyone needs professional help with. Finances are all around us, and they are way more complicated than we’ve ever imagined. Investing may sound like magic from a Harry Potter book and, while it might actually be quite similar, it has real-life consequences, and you should be on the winning side. The more you know about the financial instruments at your disposal, the better choices you’ll be able to make, and you’ll know when to back away.

        Investing into your 401(k) plan is also an investment, even though many people don’t consider it that way. Whenever you get your paycheck, a small portion is set aside, and after years, especially when you’re older and unable to work, you’ll have money on the side, or in case of an emergency.

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        If, on the other hand, you’re interested in stocks, there are many options that we cannot cover in an entire article itself. That is why it is better to find someone who does that sort of thing professionally, but even then be mindful of what you’re doing.

        Another type of investing can be insurance. There are many kinds of insurances. You can insure almost anything (it’s even said that Jennifer Lopez insured her behind, so there’s that fun fact). You never know when you might need a large sum of money for something unexpected. Hey, nobody likes thinking about this kind of stuff, but it is a part of life.

        Life insurance might help your family if someone unexpectedly dies, and health insurance will help you with doctors’ bills. Home insurance will help you in case of break-ins, natural disasters and what-not. Like I said, it is all dark stuff, but dark stuff happens.

        4. Always Have a Savings Account

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          Once you’ve surveyed your finances, and found some money you are willing to set aside, then it is a good idea to start a savings account.

          Choose any bank, just don’t try to hide your money under your bed. Not only will a bank give you a small interest (in this case, you are lending your money to a bank, and they are paying interest to you – and isn’t that a nice turn of event?), but it will keep your money safe and sound, and always at your disposal. Even a small monthly amount can accrue to a lot of money over a few years, and that can easily become your kid’s college or emergency fund.

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          When creating a savings account, you should always have at least 3 months’ worth of money – so that in case you suddenly lose your job, you have some time to find another without worrying about survival. Another great piece of advice here is to create a special savings account that is not connected to any credit card. This is to prevent yourself from spending that money when you do not really need it. You should not even have easy access to it. It might sound counterintuitive, but it will help you save some money.

          5. Find Additional Income

          Another great piece of advice that might seem too obvious is that you should find another job. There are many agencies that will give you an opportunity to work online as a tutor of almost anything you are good at. Do you know a bit of German or French? Why not use those skills and earn some money in the process. The Eastern markets are full of people who are more than eager to learn Western languages, so it is even possible to be an English teacher, even though you are not fully qualified.

          If you need more radical changes, you can sell off the stuff you don’t use, and make some money that way. Make a yard sale, or even better – put all the things you haven’t used in the last year on eBay, especially things like clothes and electronic appliances.

          Mind you, this won’t solve your finances, but it might help in the short run, especially if you are struggling to get your hands on some quick cash. An additional job will help you in the longer run, but it will probably ruin your personal life, but who needs that anyway.

          All joking aside, finances are no laughing matter. Money can ruin your life or make it great, so it is extremely important to always take care of it. Spend it wisely, invest it properly, and always have a small backup.

          If you are in dire need of some help, either find an additional job or ask a friend for a quick loan. Refrain from banks, but if you cannot avoid them, use their services cautiously, and always bring someone with more experience to the bank; they can help you understand the fine print and make a better decision. Good luck!

          Featured photo credit: http://getrefe.tumblr.com/ via 66.media.tumblr.com

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          Vladimir Zivanovic

          CMO at MyCity-Web

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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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