If you’re interested in managing your money better, you’re not alone if you feel a bit confused about it. Like most people who feel overwhelmed about their finances, you just don’t know where to start. But the great news is that it’s never too late to take control of your finances and get back on the right track.
Here are three practical things you can do when handling your finances that will help you take charge of your money and begin your journey to financial freedom and peace of mind.
1. Manage Your Credit Cards Well
Credit card companies are required to give customers adequate notice of their payment due date (typically 30 days). It’s a good idea to keep a calendar where you’re tracking upcoming credit card payments once you pay off debt.
Calendar apps with reminders are great, especially when your day gets too packed, and you forget things you wrote a while ago. It’s always a good idea to put the reminder in your phone or get on automatic with your bank so you don’t skip payments.
It’s important to understand the difference between the credit card due date and closing date and not get them mixed up. The due date is the date your credit card payment is due, while the closing date is used by credit card companies to close out the billing cycle of your credit card account. If you do not pay your balance in full on the due date, you will be charged a late payment fee and interest will also begin to accumulate on your balance.
2. Invest Your Money
Investing does not have to be scary! With the right information at your disposal, you can invest your money in ways that will help you grow your money and improve your standard of living.
There are many investments that can help you improve your net worth and financial future (and yes, there are some bad investments but that’s another story). Some of the more popular ones today include stocks, bonds, mutual funds, ETFs, and real estate investment trusts.
These investment opportunities will be available for you to buy through some of the top online brokers. You may not realize it, but all brokerages are not similar. The opportunities afforded by the best brokers differ significantly from investment opportunities offered by average brokers.
3. Create a Personal Spending Plan
Once you have a personal spending plan, stick to it. It will save you stress and confusion as you try to meet all of your financial needs on one monthly basis.
Spending less than you earn is a good way to build wealth. It’s also a good way to avoid poverty. If you earn too much, the government will reduce the amount of money you can spend each month — and that’s a problem since your monthly expenses don’t just include groceries and rent. Also, keep in mind that some tax rules change each year so your personal spending limit can change each year as well.
Here’s how to calculate your spending for the coming month:
- Tally your monthly expenses. This is usually a pretty accurate measure of your total spending, but it’s tricky to visualize.
- Calculate your household’s monthly take-home pay. This is more or less a guess at what your total spending will be, but it’s a good starting point since it accounts for your income.
- Subtract your expenses from your income. This can be helpful if you have a lot of small bills that are piling up but aren’t adding up too much.
Once you have a financial plan, you won’t be wasting money and you will build your wealth through smart investments.