Have you set yourself financial goals but don't know where to start? There are so many different aspects of money management that it can be difficult to find a starting point when you're trying to achieve financial success. If you feel lost and overwhelmed, take a deep breath. Progress can be made in small, manageable steps. AkademiPune brings you 8 tips.
Create a family budget
The biggest step towards effective money management is creating a household budget. First you need to figure out exactly how much money you get each month. Once you have this number, organize your budget by financial priorities: essential living expenses, contributions to retirement savings, debt repayment, and any entertainment or living costs. Having a clear picture of how much you have coming in and going out each month is key to achieving your financial goals.
Calculate your net worth
Simply put, your net worth is your total assets minus your debts and liabilities. You need to calculate whether you are left with a positive or negative number. If the number is positive, you are headed for growth. If the number is negative – which is especially common for young people just starting out – you'll have to keep paying off the debt.
Remember that some assets, like your home, count on both sides of the ledger. While you may have mortgage debt, it is secured by the resale value of your home.
Review your credit reports
Your credit history determines your creditworthiness, including the interest rates you pay on loans and credit cards. It can also affect your employment opportunities and livelihood opportunities. Every 12 months, you can check your credit report from each of the three major credit bureaus. It may also be a good idea to request a report from a bureau every four months so you can keep an eye on your credit throughout the year without paying for it.
Regularly checking your credit report will help you stay on top of any accounts in your name and can alert you to fraudulent activity.
Set a monthly savings amount
Transferring a certain amount of money to a savings account at the same time you pay your other monthly bills helps ensure you're regularly and intentionally saving money for the future. Waiting to see if you have any money left over after paying for all your other living expenses can lead to uneven amounts or no savings at all.
Make minimum payments on all debts
The first step to maintaining good credit is to avoid making late payments. Try to make your minimum debt reduction payments within your budget.
Set a financial goal to reach by the end of the year
An important part of financial success is being aware of where to focus your energy in terms of certain financial goals, such as having an emergency savings account.
If you're overwhelmed trying to work on all of your goals at once, pick one that you can focus on and achieve it by the end of the year.
Take a spending break for a month
Unfortunately, you can never take a break from paying your bills, but you have complete control over how you spend the rest of your income. And it may be the only way to make some progress toward some of your savings goals. Try cutting some of your lifestyle expenses for just one month to smooth out your savings account. You can start by bringing your lunch to work every day or by giving up eating out after work./AkademiPune