Basic Steps to Up Your Money Management Game

Money Management Game

Building a successful relationship with your personal finances is not an innate skill for everyone. In fact, some people’s discomfort with it is the main reason that they find themselves in constant financial turmoil. Simplifying your understanding of money, and perfecting your skills on a small scale will give you a better chance at locking in a routine that works for you, and an opportunity to grow past your fears and combat a toxic relationship with your own money.

Tackle Your Debts

A leading cause of financial stress is debt management, especially if it has snowballed to an amount so large, paying it off seems impossible, but it is not. Look over your debt by category, who do you owe, how much do you own them, and how long do you have to pay them back. Auto loans are a good example of a loan that has a shorter lifespan than say a mortgage or student loan debt, making it easier to reconfigure. Compare the interest loan you signed with, to the current rates available, if the current one is lower, investigate refinance options. Find the best lender to refinance your auto loan to save money, and then allocate those saved funds towards repayment of other debts. Not all lenders offer auto loan refinancing so shop around, starting off with the base knowledge of interest rates is going to help guide you towards the most beneficial deal to help free up funds each month.

Create a Budget

Even the wealthiest people in the world spend and save as guided by a budget. If you have created one in the past that you couldn’t stick to, it shows that it wasn’t personalized to your specific needs and goals. Begin with basic categories such as income, fixed expenses, flexible expenses, and savings, not overcomplicating it will help you adhere to it more successfully. You can even look to your phone to assist you with this, there are tons of programs and apps available that can help you track and plan for your money with very little needed from you. After a few months of practicing living inside these terms it will become second nature and you will develop the confidence you need to develop financial comfort.

Set Savings Goals

After you have become educated and comfortable with the details of your specific debts, and your specific budget, it is time to plan. Retirement, investments, and general savings are the areas that are going to grow your net worth and provide financial freedom down the line. Take advantage of any retirement matching you might be eligible for with your employer and try to max that out when you can, accepting free money from them is a no brainer. Developing some self-control regarding your savings is also a good way to live within your means. Once money is allocated to savings, leave it there and try to refrain from borrowing from yourself to give permission to exceed your budgetary limits. The goal is to lower stress associated with your finances so the earlier you learn to enforce good behavior the easier it will be to maintain it long term.

Improve Your Credit Score

While credit may not come to mind as a way to manage money, if you think about how lenders take your credit score into account when granting approval terms, any interest you save, the more it helps your monthly expenses. First, most importantly, is making your payments on time. By paying on or before the due date, not only will you be saving a potential late fee or spike in interest rate, going thirty days late cases an impact on your score that can be left out there for under a decade before it’s removed. Next, keeping your balances as low as possible goes without saying, but the higher your statement rises closer to the overall limit, the more it impacts your score. Paying off the monthly statement balance not only saves you from paying interest, but keeps your balance from carrying over and rising month over month.

If you’ve had difficulty with credit card discipline, it can be a huge sense of accomplishment to finally payoff the balance. Once you see that zero it might be instinct to close the account so you can avoid going into debt in the future, but actually this could impact your score. If you want to avoid using the card, simply cut it up, but keep the account open. That way, your overall utilization will be low, and the available credit will remain open, showing the lender that you can handle responsibly, even if they don’t know that your card is now in the waste basket. Credit score will drive any loan you take out in the future, so it’s best to manage that as best you can and strive for as high as you can reach.

Related posts

Invest 1 Million Dollars for a Guaranteed Income

Akarsh Shekhar

How to Pick Stocks: Important Things To Know And Warren Buffet’s Tips

Akarsh Shekhar

A Beginner’s Guide to DeFi

Shweta Jhawar