Managing our money can be intimidating, but it’s crucial to securing a comfortable present and future. After all, it’s pointless earning money if it’s all leaking out the back door without your noticing. Half the battle is in trying to keep debts manageable.
Sometimes, taking on debt is inevitable. Whether you’re starting a new business, going to college or run into unforeseen circumstances, you’ll sometimes find yourself getting a loan. When you do, it’s crucial that you make paying it off your number one priority.
There are simple steps you can take to regain control of your personal finances and start to cut down on debt. There are tools you may not have heard of, like balance transfer credit cards, that can save you plenty of money. There are also little things you can do in day-to-day life, like eating out less and thrifting, that can help.
Thankfully, you don’t need an MBA to get a handle on your finances. All you need to do is invest some time to learn the basics of how money works, and a willingness to make a few simple lifestyle changes.
Here are six practical ways to get on top of your finances and get out of debt.
1. Tackle credit card debt with a balance transfer offer
Balance transfer credit cards allow you to transfer your existing credit card debt onto another card with a lower interest rate. This allows you to reduce your credit card debt over the period where they can enjoy that reduced interest rate.
Balance transfer cards are a fantastic way to save money essentially for free. While the difference in interest rates may not seem huge, it really adds up over time.
2. Set an adjustable budget
Setting a budget puts a structure on how you spend money, and is a great way to make sure you don’t live beyond your means.
You don’t need to start from scratch: there are many tried and tested personal budget structures out there. Of course, these are only guides. No two lives are alike, and you’re free to make alterations to the existing budget templates based on your situation.
3. Limit unnecessary spending
There’s a lot of truth to the old adage that ‘a penny saved is a penny earned.’ If you can save 30 dollars on a fancy dinner and instead make yourself something to eat using ingredients you spent a fiver on, that’s 25 dollars you can save, invest or spend on something else.
Meal prepping is an easy way to save tons of money. A lot of the temptation to eat out or order takeout comes from the fact that cooking is time consuming. By preparing your meals for a whole week in one go, you eliminate this problem.
4. Diversify your investment portfolio
One of the best pieces of advice anyone can give you for cultivating wealth in the long-term, is to maintain a varied investment strategy. In other words, don’t put all your eggs in one basket. Invest your money in different kinds of assets, so that if one or two fail, you’ve got others to fall back on.
There are countless investment options out there: stocks, government and corporate bonds, REITs, commodities, time deposits and more. Do your own research into what these are, and invest in those you understand best.
5. Set saving goals
Setting saving goals are crucial to making sure you have enough money to do the things you want. There are savings tools out there that can help you calculate just how much you need to put away based on how much you earn and what your goals are.
Set targets based on your life goals. Are you saving up to buy a house? To get married? Have kids? Saving goals aren’t just for the big things, either. Maybe you want to go on that dream vacation, or buy that cute but slightly pricey dress.
6. Establish an emergency fund
Finally, while you may feel unstoppable right now, you never know what the future brings. Whatever stage in life you’re currently in, it’s always wise to put some money away for a rainy day.
When deciding where to put your emergency money, look for an investment vehicle that’s low-risk and that pays a stable interest. You’ll also want it to be liquid, so you can take your money out anytime.
Key to maintaining an emergency fund is to never, ever take money out of it unless absolutely necessary. If you need a little extra to spend on your wants, use the interest your fund earns over time, but keep the principal intact.
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As we’ve gone through in this article, managing your personal finances doesn’t have to be hard, or complicated. There are many simple things you can do to get started on your path to long-term financial security.
Do some research on all your options and evaluate where you are in life and where you want to go. Don’t wait too long: now’s as good a time as any to get to work on your financial plan.
