You’re successful and intelligent, you know how to complete your individual tax return online, and you’re aware of your incomings and outgoings. Still, like the rest of us, you have a long way to go when mastering money. During the harsh economic times that have flowed on from the pandemic, we all need to become better at managing our finances.
To help you achieve this difficult balance, here are five tested and approved tips you can use to quickly improve your understanding of money management:
1. Understand Credit Scoring
How you are with money is officially identified by lenders using evidence you have borrowed money and paid that money off in time (or not). It is applied to all your registered transactions, from utility bills to credit card overdrafts. There is a little more to it, but as a general rule, your credit history (borrowing and paying off money) impacts your ability to access all kinds of financial products and even essentials like the ability to rent a home. Understanding credit scoring gives you the power to improve it and actively put yourself in a better position to access essential products and services in the future.
2. Learn How To Budget
Around 50% of Americans feel that learning to budget was their most valuable money lesson. This is a skill we all need to master if we want to take genuine control over what goes in and comes out of our bank accounts.
Effective budgeting is essential for overcoming debt and reaching financial goals. Utilizing a budgeting guide that works for you is a fantastic starting point for your personal finance education journey. Thankfully, many free apps, videos, and other resources are available online.
3. Utilise Expert Services
Sadly, research consistently finds that many Americans have poor maths skills. Can you improve your financial knowledge with self-education? Absolutely. However, if math is a weakness, you’re going to run into trouble. Since getting in trouble with your finances can be as dire as facing prosecution from the tax office, this is a challenge you’re going to need to be honest with yourself about.
If you know math is a weakness, it may be wise to use the services of tax experts, financial advisors, mortgage advisors, and even friends who are good with their money. There’s no shame in asking for help when your efforts aren’t giving you the results you need.
4. Protect Yourself
Sadly, 56% of Americans do not have enough money to cover a $1K emergency, and over 30% run out of money before payday. Learning to save is an essential way to protect yourself against these kinds of eventualities. Pair this with your understanding of how to budget (tip one), and you’ll be able to create a substantial nest egg.
5. Watch What You Spend
One of the easiest ways to learn more about your finances and how to manage them is to become aware of your spending. Many people pay astonishing amounts for subscriptions and gym memberships they aren’t even using. That’s potentially hundreds of dollars a year going untracked and wasted, and it’s just one example of how we can take our eye off the ball with our finances and see significant losses. By checking every transaction and knowing where every dollar goes, you’ll learn quickly how to improve your spending habits.
“An investment in knowledge pays the best interest.” – Benjamin Franklin
Education in personal finance is one of the best gifts you can give your future self, enabling you to achieve financial goals and free yourself from the trap of debt. So, go forth and empower yourself with well-honed money management skills!