Money, and a healthy relationship with it, are a necessary evil. The fact of the matter is, regardless of if you enjoy finance as a hobby or simply tolerate it because life requires cash, money is not going anywhere. If you are just starting to develop your relationship with your finances, you owe it to your future self to get educated on smart money moves that can help your dollars work for you down the line. These tips and tricks apply to everyone no matter where you fall on the love/hate scale. And you never know, maybe one small tip will be all the push you need to look at your personal finances in a whole new light.
Budget for Savings
Living paycheck to paycheck is a harsh reality for many people, however, do not discount the long-term benefits of budgeting for savings. No matter your income level, you can also adjust your finances to allow some portion of your income to be saved each month. Even $20 put away and left untouched is significant. Many people allow themselves to view savings as linear, but the truth is there are ways to save your money that reach beyond a traditional savings account that you can consider.
Life insurance policies are an example of just that. The typical purpose of a life insurance policy is to create financial protection for your loved ones in the event of your death, but did you know you can also use it as a form of a savings account? As I am sure you would expect, there is some fine print to be aware of, but in many cases, you can agree to turn to the secondary market and receive a cash payout for your policy. This is a sneaky way to save for the future because often the monthly contribution from you is minimal and can be easily budgeted around.
Determine Your Priorities
While it is true that you cannot plan everything and have life follow that plan to a T, a plan for your finances is a necessary tool for establishing a healthy relationship with money. You should determine your priorities as you develop your budget and keep in mind that both your priorities and budget will evolve as your life moves forward. Haphazardly handling your money is a huge disservice to yourself and you need to realize that there are many financial decisions with everlasting impact on your life. For example, credit cards can be an incredible financial tool, or they can completely cripple your overall financial health.
Track Your Spending
The only true way to understand your financial habits is to track them. If you do not have an idea of how much you are spending and what you are spending on, then any budget you develop will not be rooted in reality. As a beginner, you are assumably looking for ease as a major element of your overall strategy and you are in luck, there are tons of available apps to track spending that make this money move almost effortless for you. Give yourself a 30-to-90-day window of tracking to then analyze the info and identify any habits that need to be revamped.