How To Properly Manage Your Finances

Whether you make a few thousand dollars a year or you're a millionaire, you need to know how to manage your finances. Making money is very freeing, but it comes with responsibility. Here's how to manage your money properly.

Determine How Much You Make

Before you can manage your finances, you should figure out how much you make. If you work a traditional full-time job, this will be pretty easy. You can look at your paystub to find your salary or your monthly or weekly rate. If you work part-time or are a freelancer, this will be a bit more complicated. You can use an app to track your income so that you can see everything at a glance. but you may want to budget as if you make your lowest paycheck each time. When you make more, you can save the extra cash or treat yourself.

Track Your Spending

After you consider your income, you should track your spending. You can use a variety of apps on your phone, and you can connect your bank account to the app. But you can also use a spreadsheet and input individual transactions yourself. Knowing how and where you spend your money can help you get a handle on your funds. If you realize that you get coffee out every day, you can start making it at home more. Or if you have subscriptions you never use, you can get rid of those.

Categorize Your Expenses

Once you have an idea of how much money you bring in each month and how much you spend, it's time to look at your expenses. You can separate bills into different categories, such as rent, food, and gas. However, you should also categorize expenses based on whether or not they are necessary for life. You may love taking monthly road trips, but unless that's for work, you don't have to spend that money. If you can't afford your basic things like rent and food, you should focus on paying for those first. Then, you can spend extra money on what you want.

Consider Your Debt

Next, you should look at any debt you have. A lot of adults have student loans, a mortgage, or a car loan. Even if you don't have a ton of debt, you should think about it when managing your money. You should consider the amount of debt you have and the interest rate. In some cases, you can refinance car loan balances to get lower interest rates. That way, you can keep the same loan term, but you won't have to pay as much over time. If you can't do this, try to pay your debt off faster so that you can save on your loan as well.

Save What You Can

If you aren't very good with money, saving it can seem intimidating. However, saving money is essential for building a safe and secure financial future. Even if you don't have a ton of money coming in, try to save what you can. A few dollars a day can make a huge difference, and you can put that money toward large purchases or emergencies. If you have more to save, you can start investing in your retirement as well. You don't have to cut out every unnecessary expense, but cutting out some will help you save for things you want to buy in the future.

Do What Works for You

As you learn how to manage money, you may find tons of people who want to give you advice. Some of that advice can be useful, and you should be willing to try out a few methods for managing your cash. However, no two people are the same, so it's okay if you want to manage your money differently from your friend or a relative. Be willing to try things, but don't be afraid to find and stick with what works for you.

Managing money is something that many people don't learn in school, but it's an essential skill if you want to be successful and independent. Keep these things in mind when managing your money.