5 Ways To Take Charge of Your Finances

We live in a world of spend, spend, spend. Advertisements on television and social media constantly expose us to new products and tempt us to spend money on a daily basis. What’s worse is that credit cards and online shopping make spending money so simple that we often forget to consider how aimless spending will affect our monthly payments, interest rates, and savings status. Taking charge of your finances is not the easiest task in the world, and can often be frustrating and overwhelming, especially if you already feel like you don’t have a lot of money to spend. But there are ways that you can start to save money and take control of your financial situation in order to better prepare yourself for future expenses. In order to better your finances, start following these five rules for saving today.

1. Open a savings account

You might not feel like you have enough money to open a savings account, but putting away a small amount of money each week is a great way to start saving for the future. It also allows you to build an emergency fund so that you can cover those unforeseen expenses and not be left in financial ruin after the fact. Plus the stress of losing a job, paying for a car repair, or an unexpected medical situation can be drastically reduced when you have a security blanket to fall back on that won’t find you struggling to maintain payments on your monthly bills.

The best way to start is in the numbers. When you open a savings account, start with a base deposit (say $25), and then add a smaller or equal amount each day, week, or month. For example, if you put $5 into savings everyday of the week, that’s $35 that you’ll be saving each week, which means you are saving $140 a month and $1,680 a year. At that rate you will have saved $8,400 after five years and $16,800 after ten years, and that’s only if you do not start increasing your weekly deposit, get a raise at work, or finish paying off an old bill. It might be slow going in the beginning, but it definitely adds up over time.

2. Make a budget

In order to help you build your savings and reduce your spending, you should consider making a budget plan. Again, you might already feel like you do not have a lot of money to throw around as it is, but having a budget allows you to maintain your monthly expenses, prioritize your spending, and set money aside for emergencies, retirement, or general savings.

When determining a budget for yourself, consider the following: how much do you make, how much you spend on your monthly bills (utilities, food, gas, loans, ect), and what are your financial goals? Once you have a general idea of this information you can start to budget accordingly, but that doesn’t mean you shouldn’t consider making some small lifestyle changes. For example, if you are trying to build a savings account but you go out to lunch everyday, consider adding $5 to your food budget for packing lunches at work. Then you can put that money that you spend eating out into your savings account each week, alleviating some excess spending and improving your financial savings.

3. Set financial goals

Having financial goals can help you build and maintain your budget plan, preventing you from unnecessary spending and better preparing you for your future expenses. Financial goals can be anything from retirement, to buying a car or house, to traveling around the world, but if you do not have any of these goals in mind when making your budget plan, you will never be able to properly save to accomplish these goals.

Start by setting long-term and short-term goals for yourself, remembering to keep things like children, college, and retirement in mind. Once you have your goals outlined you can then break each one down into smaller steps in order to begin working to achieve them. When you achieve one goal or are getting closer to achieving one, reevaluate your financial plan so that you have a solid understanding of your current situation and what goals you still want to achieve.

*Consulting with a financial advisor is a great way to outline your financial plans and receive helpful advice on how to budget your spending.

4. Avoid using credit cards and overspending

Credit cards make spending money way too easy, which makes saving it all the more difficult. When keeping to a financial plan, it is important that you avoid spending more than you can afford on your monthly bill payment. If you continue to spend in larger and larger amounts with your credit card, your minimum monthly payment will also continue to rise, so calculating your credit card budget each month is another great way to stay on top of your finances.

Carrying cash with you is another way you can keep your spending in check. If you have a set amount of dollars in your wallet you are automatically limited to how much you can spend, which will force you to make better financial decisions and budget your money more accordingly. Cutting back on reckless spending, like excess shopping, and bad habits, like daily Starbucks, cigarettes, alcohol, and fast food, can also go a long way in securing your finances.

5. Keep your resume updated

One thing that prevents people from coming into a better financial situation is their employment status. Many people tend to find themselves in underpaid positions that they took simply to have some kind of income, because the job market was weak, or because they wanted to increase their experience in that particular field and so took the lower paying position. Remaining in an underpaid position for an extended period of time, however, can be damaging to your current financial situation and your future goals.

If you have worked in the same position for more than a year and have not been offered a raise or promotion, you have two options. The first is to ask for a raise or apply to a higher position within the company and make your case to your employer. A lot of people avoid discussing finances with their employers simply because it is uncomfortable subject matter, but if you have time and experience behind you and feel your work is underappreciated, asking for a raise is perfectly acceptable, especially as you grow older and take on additional expenses. The second is to start looking for other jobs. Once you have been in the job market and have gained experience in your field, employers are more willing to consider you for higher paying positions, so be sure to keep your resume up-to-date in order to reflect your experience and professional status.