When it comes to putting yourself in the best possible financial position and having your Personal finance under control, effective money management is vital. Are you aware of your expenses? What about your credit score? Are you keeping track of your debt? These are all essential factors to consider in becoming a money management superstar.[soros]
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While exceptional financial skills aren’t always necessary to manage your money better, there are a few tips we could all use to help us stay in control of our finances. To that end, here are our top four ways to effectively manage your money in 2021.
Step 1: Budget better
While you might think a budget isn’t necessary, or it can be a tedious approach to managing your money, it’s incredibly useful. Knowing the source of your money, or where your money is coming from, and where your money is spent are two key parts of better budgeting.
Knowing where your money is going, for example, forces you to check your spending. You will want to consider your essential expenses, such as your bills and rent, and think about your “not-so-essential” expenses, such as money you spend on health care. Keeping track of these two factors is key to your budget, as is keeping it up to date with your spending. This way you will find it easier to keep track of your money.
Step 2: Look for discounts wherever possible
Spending what you can afford to spend is key to better managing your money. This is where it is ideal to look for discounts and pay the perfect price for services and products. Looking at for discounts on services and reduced prices or sales of the products you want to buy, you can reduce your expenses.
Coupons are also another way to take advantage of discounts. So, instead of throwing them away, you might want to keep your coupons to make sure you always pay the ideal price for your products.
We’re not saying you should never have fun. But it’s essential to be careful when it comes to spending money you don’t have. Find different ways to indulge yourself and try to stop spending.
Step 3: Keep track of your responsibilities
Coming back to the importance of a good credit score, you’ll want to keep an eye on the number of loans you’ve taken out. The ideal is to go through all of your credits – your credit cards, car loans, and mortgage loans, for example, and record your expenses on an Excel spreadsheet.
Keeping your monthly expenses low – in terms of loans – is important, especially if you can’t afford the monthly repayments. This is because even if your bank approved your loan application in the first place, it can be difficult to maintain monthly payments if you have other obligations.
Step 4: Save, save and save and use a savings account
The last step to better managing your money is to save as much as you can. If you’ve had your eye on a flashy product, what’s the best way to buy it? Instead of buying with a credit card, for example, make sure you save up beforehand and accumulate your cash until you are sure you can afford it.
Ultimately, your vital expenses such as your bills, mortgage loans or rent are more important than a flashy product. No matter how much you want it, it is always best to try to save as much as possible and buy that product when you have the money together.
How do savings accounts fit in there? They are critical and can strengthen your savings efforts in a number of ways. Not only can you make instant and automatic transfers between your checking account and your savings account, but you’ll also be able to monitor your savings, set how much you want to save each month, and make regular deposits.
Manage your money with ease: key points to remember
While managing money can seem like a challenge, you can make it easier to do this by:
- Create and stick to a budget
- Keep an eye on discounts, coupons and sales
- Control your expenses and Liabilities, and
- Regularly place a percentage of your money in a savings account
With these key steps, you will soon become a pro at money management and start seeing your money grow in no time.