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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

          More by this author

          Vladimir Zivanovic

          CMO at MyCity-Web

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          Published on July 4, 2018

          Top 10 Recommendations on Money Management Apps

          Top 10 Recommendations on Money Management Apps

          Don’t want to overspend your budget, swipe your credit card too many times, and feel like a financial mess? Instead of beating yourself up for the bad financial decisions you’ve ever made, create a new plan!

          The solution is simple, save more and spend less. But, we all know it’s easier said than done.

          One problem is finding quality apps that save you time and money, and aren’t just hype.

          Luckily, there’re many great money management apps available at your fingertips. Here are 10 reliable money management apps that can help you save money, and crush debt.

          1. Personal Capital

            When was the last time you’ve tracked your net worth? Probably months ago or maybe never. Personal Capital allows you to easily track your net worth and plan for retirement.

            Here are some of its main features:

            • Sync many investment accounts, and expenses (mortgage, credit cards, etc.) in one place
            • Discover hidden fees and how much they’re affecting your retirement plan
            • Wealth management for investors requiring a long-term strategy

            With Personal you’re free to track your expenses and net worth.

            Available for: iOS and Android

            2. Mint

              If your smartphone could only install a few apps, Mint would be one of them. Why? Because Mint tracks all your balances and bills in one place.

              Here are some of its main features:

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              • Effortlessly track all your bills and balances in one dashboard
              • Categorized expenses to understand where you spend your money
              • Uncover hidden fees, and determine your investment style with sophisticated retirement tools.

              Feel at ease with managing your money by a reputable company that isn’t going anywhere.

              Available for: iOS and Android

              3. YNAB

                Everyone needs a budget, there’s no way around it. YNAB (You Need A Budget) is an easy to use app that will change the way you think about money. Their motto is to “give every dollar a job”, and you’ll quickly discover why.

                Here are some of its main features:

                • Easily sync all bank accounts in one place
                • Visually see your debt paying progress with eye-catching charts and notifications
                • Customized categories setting saving goals

                The best part about YNAB is the community that comes along with it. You can hop on the YNAB forum to receive support, listen to the YNAB Podcast or stay tuned for their weekly videos.

                Available for: iOS and Android

                4. Wealthfront

                  Albert Einstein once said “compound interest is the eight wonder in the world”, and for a very good reason. The problem is, most people are scared or unwilling to learn the basics of investing. This is why Wealthfront is the perfect solution for the hands-off investors.

                  Here are some of its main features:

                  • Variety of investment account options including IRA, Roth IRA, and more
                  • Your portfolio composed of 7 different asset classes
                  • Automatically rebalanced portfolio
                  • Daily tax loss harvesting

                  Wealthfront is perfect for people requiring investment guidance, or prefer a hands-off solution.

                  Available for: iOS and Android

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                  5. Clarity Money

                    If you’re staying on top of your budget but want to take your finances to the next level, Clarity Money can help you. Clarity Money helps you stay under budget and build a personalized savings plan.

                    Here are some of its main features:

                    • Easily cancel subscriptions with one click
                    • Synchronize bank accounts fast
                    • Transfer money effortlessly between different accounts

                    Clarity Money isn’t an app that does it all. But, it does make transferring money and canceling subscriptions fast and efficient.

                    Available for: iOS and Android

                    6. Acorns

                      What if there was a way to quickly gain confidence in investing your money, without too much risk? There is, and Acorns is your solution. With Acorns’s technology, you’re able to make investments as small as $5.

                      Here are some of its main features:

                      • Automatic contribution option
                      • Customized portfolio tailored to your needs
                      • Low management fees ranging from $1-$2 per month

                      Stop wasting dollars on expensive coffee. Instead, invest them towards a brighter financial future.

                      Available for: iOS and Android

                      7. Albert

                        Do you budget by only subtracting your expenses from your income? If so, how would you discover any overpayments or extra money you could save? This is where Albert shines, and it does it all free.

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                        Here are some of its main features:

                        • Receive notifications for overpayments, hidden fees, and low balances
                        • An Automatic budget that’s built around your spending and income
                        • Easily track debt and set new financial goals

                        While Albert does offer a paid option, most of its core features are FREE. So, what better option to save?

                        Available for: iOS

                        8. Prism

                          Have you recently forgot to pay a bill because life got in the way? Prism automatically tracks your bills and syncs your bank accounts in one place.

                          Here are some of its main features:

                          • View all your account balances in one glance
                          • Bill due dates are automatically pulled and tracked
                          • Receive early reminders for upcoming bills

                          If your budget is on “fleek” but can’t seem to stay on top of your bills, Prism is your go-to app.

                          Available for: iOS, Android, Windows, Amazon

                          9. Mvelopes

                            Remember hearing about people using envelopes to budget their money? Well, Mvelopes is the new envelope system for this generation. Easily create monthly budgets and track your saving goals.

                            Here are some of its main features:

                            • Connect unlimited bank accounts
                            • Real-time budgeting with auto transaction syncing
                            • Low monthly $4 fee or $40 annual

                            Mvelopes can help you crush debt, save more, and help you stop overspending. With its low monthly fee, it’s worth a try.

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                            Available for: iOS and Android

                            10. Wallaby

                              Most people don’t have time to track their credit card’s changing rewards and interest rates. Because of this, you need help reaping the most of your credit card’s rewards. Wallaby is the app that will help you do just that.

                              Here are some of its main features:

                              • Automatic recommendations for the best credit card to use for each transaction
                              • A friendly user interface, displaying credit cards with their corresponding images
                              • Free to use

                              If you’re using the same credit card to make your purchases, you may be leaving money on the table. Give Wallaby a try if you’re ready to maximize your credit card’s rewards.

                              Available for: iOS and Android

                              Take control of your finances and experience financial freedom

                              Picture yourself staying on budget and saving more money than you’d ever imagined.

                              It took hard work and dedication but you’d finally learned how to manage your money. You have to start taking control of your spending and saving habits.

                              You now have a list of reliable apps that can help you build better money habits, what are you waiting for?

                              Featured photo credit: Pexels via pexels.com

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