For many of us, our relationship with money is a love-hate affair. You need it to survive and it helps you afford luxuries, from time to time, but it’s also likely to be the root of most of your stress. Of course, it doesn’t have to give you sleepless nights. Whether you earn a lot or a little, money management is the key to getting your financial house in order. If you can learn to monitor your income and expenditures along with preparing for all eventualities in the future then you’ll have done your best to protect your finances. If you’re ready to do more to look after your money then here are the 5 steps to putting your money worries to bed.
Make A Personal Budget
Rather than fretting over the amount of money you make, focus more on using that money wisely. People with big salaries can be reckless enough to go bankrupt, and people on minimum wage can be smart enough to have enough money remaining at the end of the month for their own personal savings. It all comes down to budgeting efficiently, at the end of the day. You need to make a note of how much you earn on a monthly basis (or weekly basis if you’d prefer to organize things that frequently). After that, you need to set aside enough of that monthly income for necessities such as food, water, electricity, rent, and so on. Any cost that can’t be avoided should be on this list.
Your remaining income is your disposable income; this is how much spending power you have on a monthly basis. The key to putting your money worries to bed is to ensure that you track all your expenses and never exceed your disposable income or dip into the money you set aside each month for necessities. If you follow these rules then you’ll never spend beyond your means and you’ll never have to worry about having too little money. Of course, you might have to be a little more disciplined with luxuries in order to make this work but you could use your savings to buy nice things in the future. It’s about thinking beyond present-day pleasure in order to ensure a happier future.
Pay Off Your Debts & Taxes
Continuing from the first point, budgeting is something that will help you avoid spending beyond your means and having to borrow money to make ends meet. That’s how you avoid debt. Of course, debt isn’t always avoidable; sometimes, you have to borrow money for bigger purchases in life such as house or car payments. It isn’t enough to say “avoid debt”. Most people have debt to some extent. A smart person learns how to manage debt. And if you follow a strict budget then this becomes easier. You need to learn to put all your disposable income towards debt repayments at the start of the month so that you’re not tempted to spend it in other ways. Avoid luxuries until you’re in the clear.
And you might want to get help settling your tax debt with a tax attorney because it can become mentally-draining to avoid pressure from the IRS. You might just need help to get your financial affairs in order. When it comes to debts and taxes, you need to get into the routine of organizing your financial affairs throughout the year so as to ensure you know where your money is going and you don’t have to put yourself through unnecessary mental strain at the end of the year (or on a monthly basis when you make your debt repayments). We talked about making a personal budget earlier; if you keep up to date with that every month then you shouldn’t have any trouble tracking where your money is going.
Make Smart Investments
If you want to protect your finances then you need to do more than leaving them in a bank to gather dust. You should invest them into something which can generate a return, build your wealth, and better secure your future. Of course, the word “investment” brings another word to mind: risk. That’s why you’ve got to learn to analyze risk and reward if you want to see a good return on your investment. Seek out safe opportunities. Investing in real estate is always a smart option. The property market might fluctuate but it never dies because people always need homes. Work on getting your foot in the door and invest in a few properties if you want to earn some money in the future. You could even let out these properties if you want to make money in the short-term.
I hope you enjoyed this article about how to put your money worries to bed and enjoy financial security.
Interested in more articles about frugal finances?
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Published by Michael J Schiemer
Owner of Bootstrap Business
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