5 BEST WAYS TO MANAGE YOUR MONEY
By MacKenzy Pierre
The estimated reading time for this post is 206 seconds
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To save, improve credit, reduce debt, and build wealth, you have to manage your money better. Here are the five best ways to manage your money.
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A personal finance budget can highlight your cash flow problems. Are you eating out too much or making too many trips to Starbucks?
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You need to try to save as much as 1,500 dollars in the emergency account, and you can keep that savings account at the same brick and mortar bank when you should already have your checking account.
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A personal finance budget is a living-breathing document, which requires constant review
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The U.S. Economy continues its decade-long growth, but Americans are having a hard time managing their money. Most of them would have to get into debt or borrow from friends or families to cover a couple-hundred dollars unexpected bills.
Based on current economic metrics, American households are supposed to be in their best financial shape, but the majority of them are struggling with financial insecurity.
The unemployment rate is a historic low, the major stock indices are trading at a record high, and annual pay increases by 3.4%.
To save, improve credit, reduce debt, and build wealth, you have to manage your money better. Here are the five best ways to manage your money
Budgeting
You are earning a decent income, but yet you are living paycheck to paycheck. A personal finance budget can highlight your cash flow problems. Are you eating out too much or making too many trips to Starbucks? A detailed budget will answer those questions for you.
Savings
Building an Emergency Fund
Saving 6 to 12 months of take-home pay needs to be the long-term goal. In the meantime, you need to start building your emergency funds right now. While reviewing your cash inflows and outflows, you will most likely discover frivolous spending that you can get rid of or cut back on. You need to contribute that newfound wealth to your emergency fund.
You need to try to save as much as 1,500 dollars in the emergency account, and you can keep that savings account at the same brick and mortar bank when you should already have your checking account.
Saving 6 to 12 Months of taking Home Pay
No matter how careful you comb through your budget, there might not be enough cuts for you to build regular savings. You might need to find a better-paid job, a side hustle, or a second job. Your 6 to 12 months savings need to be invested in high-yield savings accounts, certificates of deposit (CDs), or treasury bills.
Pay Down Debt and Build Credit
Paying down debt and building credit is the next step once you have enough money in your emergency fund. If you have collection accounts, you need to call the creditors and negotiate a settlement. In most cases, you can settle collection accounts for about $0.50 on a dollar.
Pay your bills on-time and review your credit report annually. You get access to all 3 of your credit reports for free by visiting this site.
Building Wealth
After you get rid of all revolving and installment debts, including credit cards, personal and payday loans, and other unsecured debt, you turn your focus into building wealth. First, you have to contribute as much as you can into your employer’s 401(k), 403(b), or any other employer-sponsored retirement account. At least the minimum you need to contribute to get full employer’s match.
If you are part of millions of American workers who don’t have access to 401(k) or any other employer-sponsored retirement account at your workplace, you can set up and contribute to a Roth IRA.
With the rising of Fintech, there are numerous money management, investing, and personal finance applications that you can use to invest easily outside your employer-sponsored retirement plan.
Monitor
A personal finance budget is a living-breathing document, which requires constant review. All major life changes such as getting married or divorced, having a child, or death of a spouse, require that you go back and review your budget. A well-thought-out budget is the first step to financial freedom.
Senior Accounting & Finance Professional|Lifehacker|Amateur Oenophile
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