You probably know folks who appear to manage money easily. Here’s how they do it.
Set goals. Setting realistic goals is important. Make your goals specific and achievable. You may have a series of goals you want to accomplish. For instance, maybe you want to pay off your debt, increase your savings or put more money in your 401(k) plan. You also might want to consider a plan to save for college or your next vacation.
Create a budget. Understanding where your money goes and managing your spending is the most important action you can take to improve your money management. It is difficult to make immediate changes to fixed expenses like rent, mortgage or a car payment, but you can make changes to your variable expenses. Variable expenses involve spending costs that vary month to month like groceries, gas and eating out. Creating a budget, monitoring your spending, and comparing actual spending to budgeted spending will open your eyes and create better awareness of your spending habits. Keep your goals in mind when creating and sticking to a budget.
Use tools. Managing your finances is easier than ever with so many software applications available for use on your desktop and mobile device. LGFCU's Compass is a complimentary resource for members. It can help you keep track of all your account balances, create a robust budget, set achievable goals and much more.
Track expenses. Hold on to all receipts, log your check register manually or through Compass and reconcile actual spending with what is in your budget. Check account balances often and monitor your transactions. Set aside time once or twice a month to make adjustments to budgets or lifestyle as needed.
Anticipate emergencies. Goals and budgets can be instantly sidetracked by the unexpected. Create an emergency savings fund based on three to six months of your fixed expenses by putting aside money every month.
The advice provided is for informational purposes only. Contact a financial advisor for additional guidance.